Paylocity Holdng (PCTY)
Cash conversion cycle
| Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 3,055.08 | 2,481.85 | 2,684.52 | 3,438.72 | 3,492.59 | — | 5.67 | — | — | — | — | — | — | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 10.43 | 9.09 | 9.17 | 8.87 | 9.15 | 9.15 | 8.95 | 8.50 | 6.74 | 8.21 | 4.91 | 4.33 | 3.60 | 5.61 | 3.82 | 2.99 | 3.20 | 3.82 | 3.06 | 2.89 |
| Number of days of payables | days | 7.14 | 4.49 | 7.25 | 8.32 | 6.12 | 8.36 | 8.48 | 7.38 | 10.65 | 6.86 | 9.62 | 10.82 | 7.04 | 5.88 | 5.14 | 6.21 | 3.52 | 7.51 | 8.07 | 11.51 |
| Cash conversion cycle | days | 3.29 | 4.60 | 3,057.00 | 2,482.40 | 2,687.55 | 3,439.51 | 3,493.05 | 1.12 | 1.76 | 1.35 | -4.71 | -6.48 | -3.44 | -0.26 | -1.32 | -3.22 | -0.32 | -3.69 | -5.02 | -8.62 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 10.43 – 7.14
= 3.29
The cash conversion cycle of Paylocity Holding has varied significantly over the past few quarters. The cash conversion cycle indicates how long it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.
Looking at the trend, we can observe that from March 2019 to December 2021, Paylocity Holding had negative cash conversion cycles, indicating efficient management of working capital and a quick conversion of inventories into sales. However, from December 2021 onwards, there was a significant increase in the cash conversion cycle, peaking at 3,057 days on December 31, 2023.
This sudden spike in the cash conversion cycle may raise concerns about the company's liquidity and efficiency in managing its working capital. It suggests potential issues with inventory management, collection of receivables, or payment of payables.
Subsequently, there was a decrease in the cash conversion cycle to more manageable levels in the most recent quarters, with the cycle close to the positive single digits range. This indicates potential improvement in working capital management and operational efficiency.
Overall, the fluctuation in the cash conversion cycle highlights the importance of closely monitoring working capital components and implementing strategies to ensure efficient cash flow management within Paylocity Holding.
Peer comparison
Jun 30, 2024