Paychex Inc (PAYX)
Return on total capital
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,174,100 | 2,033,100 | 1,840,000 | 1,460,700 | 1,460,500 |
| Long-term debt | US$ in thousands | 798,600 | 798,200 | 797,700 | 797,300 | 796,800 |
| Total stockholders’ equity | US$ in thousands | 3,801,000 | 3,493,200 | 3,085,200 | 2,948,000 | 2,781,400 |
| Return on total capital | 47.27% | 47.38% | 47.39% | 39.00% | 40.82% |
May 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,174,100K ÷ ($798,600K + $3,801,000K)
= 47.27%
Paychex Inc's return on total capital has shown a consistent trend of strong performance over the past five years. The company's return on total capital has remained above 39% each year, with an increasing trend from 40.82% in 2020 to 47.27% in 2024. This indicates that Paychex has been effectively utilizing its capital to generate profits for its stakeholders. The consistently high return on total capital suggests that the company has been efficient in generating earnings from the total capital employed in its operations. Overall, Paychex Inc's performance in terms of return on total capital reflects strong financial management and effective utilization of resources.