Paylocity Holdng (PCTY)

Short-term

Turnover ratios

Looking at the activity ratios of Paylocity Holdng over the past five years, we can draw several key observations:

1. Inventory Turnover:
- The inventory turnover ratio for Paylocity Holdng was exceptionally high in 2022, at 64.41, indicating that the company efficiently sold and replaced its inventory during that period. However, this ratio dropped significantly in 2023 and 2021, implying slower turnover of inventory during those years.

2. Receivables Turnover:
- The receivables turnover ratio indicates how efficiently the company collects on its credit sales. Paylocity Holdng's receivables turnover has been decreasing over the years, from 114.02 in 2020 to 35.01 in 2024. This could suggest that the company has been taking longer to collect on its accounts receivables, which may impact its cash flow.

3. Payables Turnover:
- The payables turnover ratio illustrates how efficiently the company pays its suppliers. Paylocity Holdng's payables turnover has fluctuated over the years, with a significant decrease in 2022 and 2020. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently the company utilizes its working capital to generate sales. Paylocity Holdng's working capital turnover has been fluctuating over the years, with the highest ratio in 2022 and the lowest in 2020. A higher working capital turnover ratio implies that the company is effectively managing its working capital to support its operations.

In conclusion, analyzing Paylocity Holdng's activity ratios provides insights into the company's operational efficiency, inventory management, receivables collection, payables payment practices, and working capital utilization. Understanding these ratios can help stakeholders assess the company's performance and make informed decisions regarding its financial health and operational effectiveness.

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Average number of days

In analyzing the activity ratios of Paylocity Holding over the past five years, we can observe the following trends:

1. Days of Inventory on Hand (DOH):
- The DOH for Paylocity Holding ranged from as high as 2,921.39 days in 2022 to as low as 2.68 days in 2024.
- The significant fluctuations in the DOH may indicate fluctuations in inventory management efficiency over the years.
- Ideally, a lower DOH indicates better inventory management, allowing the company to convert inventory into sales more quickly.

2. Days of Sales Outstanding (DSO):
- The DSO for Paylocity Holding has shown a consistent increase over the years, indicating a longer period for the company to collect its accounts receivable.
- The DSO increased from 3.20 days in 2020 to 10.43 days in 2024.
- A higher DSO may imply potential issues with customer credit policies or difficulties in collecting outstanding payments promptly.

3. Number of Days of Payables:
- The number of days of payables for Paylocity Holding has fluctuated between 3.52 days in 2020 to 10.65 days in 2022.
- An increase in the number of days of payables indicates that the company is taking longer to pay its suppliers.
- This could suggest either strained liquidity or a deliberate strategy to manage cash flow by extending payment terms.

In conclusion, while the DOH and DSO ratios exhibited fluctuations over the years, the trends in these ratios provide insights into the company's inventory management efficiency and accounts receivable collection effectiveness. The number of days of payables also highlights the company's strategy regarding managing payables and cash flow. It is essential for Paylocity Holding to closely monitor these activity ratios to ensure optimal working capital management and operational efficiency.

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Long-term

Paylocity Holdng's long-term activity ratios reveal important trends in the company's efficiency in utilizing its assets over the past five years. The fixed asset turnover ratio has consistently increased, indicating that the company has been generating more revenue per dollar invested in fixed assets. This implies improved efficiency in utilizing long-term assets such as property, plant, and equipment to generate sales.

On the other hand, the total asset turnover ratio has shown fluctuation over the same period. While there was an increase in 2023, the ratio decreased in 2024. This suggests that the company's overall efficiency in generating sales from all assets, including current and fixed assets, has been inconsistent. It is important to further investigate the reasons behind these fluctuations to understand the company's overall asset utilization efficiency.

Overall, the increasing trend in fixed asset turnover reflects improved efficiency in utilizing long-term assets, while the fluctuating total asset turnover ratio warrants a deeper analysis to better assess Paylocity Holdng's overall asset utilization performance.