Paychex Inc (PAYX)
Cash conversion cycle
| May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 1,386.13 | 1,378.05 | 1,059.25 | — | — | — | — | — | 1,128.86 | 1,095.20 | 1,101.09 | 1,252.87 | 1,012.06 | 972.88 | 996.60 | 1,292.66 | 1,123.42 | 1,144.62 |
| Days of sales outstanding (DSO) | days | 112.39 | 119.18 | 116.90 | 112.98 | 103.96 | 104.94 | 105.45 | 105.86 | 104.33 | 97.79 | 115.55 | 94.08 | 94.79 | 102.38 | 91.10 | 78.48 | 71.39 | 75.30 | 81.95 | 80.58 |
| Number of days of payables | days | 25.73 | 23.28 | 22.96 | 23.79 | 21.28 | 30.98 | 22.25 | 22.16 | 28.45 | 30.99 | 24.34 | 22.59 | 25.55 | 21.63 | 20.41 | 17.92 | 22.63 | 19.72 | 22.28 | 18.46 |
| Cash conversion cycle | days | 86.66 | 95.90 | 1,480.06 | 1,467.24 | 1,141.94 | 73.95 | 83.20 | 83.70 | 75.89 | 66.80 | 1,220.07 | 1,166.69 | 1,170.33 | 1,333.62 | 1,082.75 | 1,033.44 | 1,045.36 | 1,348.24 | 1,183.08 | 1,206.74 |
May 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 112.39 – 25.73
= 86.66
The cash conversion cycle of Paychex Inc has displayed significant fluctuations over the past few periods. The cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales.
In the most recent data point, the cash conversion cycle was 86.66 days, indicating an improvement from the previous period's 95.90 days. This suggests that Paychex Inc has been more efficient in managing its cash, inventory, and receivables to generate cash flow.
However, looking back at November 30, 2023, and August 31, 2023, the cash conversion cycle spiked remarkably, reaching 1,480.06 days and 1,467.24 days, respectively. These exceptionally long cycles could be a cause for concern as they indicate delays in converting investments into cash, potentially affecting liquidity and operations.
The company's historical performance shows fluctuations in the cash conversion cycle, with some periods demonstrating improved efficiency (e.g., February 28, 2023, at 73.95 days) and others displaying significant inefficiencies (e.g., November 30, 2021, at 1,220.07 days).
Overall, Paychex Inc should monitor and manage its cash conversion cycle closely to ensure optimal cash flow management and operational efficiency.