Richard Sloan from the University of Michigan was first to document what is referred to as the "accrual anomaly". His 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones.
Paychex's Sloan Ratio for the quarter that ended in Feb. 2023 was -2.20%.
As of Feb. 2023, Paychex has a Sloan Ratio of -2.20%, indicating the company is in the safe zone and there is no funny business with accruals.
Paychex Sloan Ratio % Historical Data
The historical data trend for Paychex's Sloan Ratio % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
Paychex Annual Data
Trend
May13
May14
May15
May16
May17
May18
May19
May20
May21
May22
Sloan Ratio %
-16.18
16.04
-13.04
3.23
13.58
Paychex Quarterly Data
May18
Aug18
Nov18
Feb19
May19
Aug19
Nov19
Feb20
May20
Aug20
Nov20
Feb21
May21
Aug21
Nov21
Feb22
May22
Aug22
Nov22
Feb23
Sloan Ratio %
8.07
13.58
1.42
-2.84
-2.20
Competitive Comparison
For the Staffing & Employment Services subindustry, Paychex's Sloan Ratio %, along with its competitors' market caps and Sloan Ratio % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Paychex Sloan Ratio % Distribution
For the Business Services industry and Industrials sector, Paychex's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Paychex's Sloan Ratio % falls in comparison to its industry or sector. The grey bar indicates the Sloan Ratio %'s extreme value range as defined by GuruFocus.
Paychex Sloan Ratio % Calculation
Earnings contain a lot of non cash earnings which is called accruals. The Sloan ratio is a way to identify firms with low non-cash or accrual-derived earnings relative to their cash flow.
Paychex's Sloan Ratio for the fiscal year that ended in May. 2022 is calculated as
Paychex's Net Income for the trailing twelve months (TTM) ended in Feb. 2023 was 296.4 (May. 2022 ) + 379.2 (Aug. 2022 ) + 360.3 (Nov. 2022 ) + 467.4 (Feb. 2023 ) = $1,503 Mil.
Paychex's Cash Flow from Operations for the trailing twelve months (TTM) ended in Feb. 2023 was 337.2 (May. 2022 ) + 364.3 (Aug. 2022 ) + 321.6 (Nov. 2022 ) + 604.2 (Feb. 2023 ) = $1,627 Mil.
Paychex's Cash Flow from Investing for the trailing twelve months (TTM) ended in Feb. 2023 was -252.8 (May. 2022 ) + 1223.1 (Aug. 2022 ) + -161.5 (Nov. 2022 ) + -699.2 (Feb. 2023 ) = $110 Mil.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Paychex (NAS:PAYX) Sloan Ratio % Explanation
A former University of Michigan researcher, Richard Sloan's 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. In fact, for the 40-year period between 1962 and 2001, buying the lowest accrual companies and shorting the highest accrual companies resulted in an average annual compounded return of 18%, more than double the S&P 500's 7.4% annual return over the same period.
If the Sloan Ratio is between -10% and 10%, the company is in the safe zone and there is no funny business with accruals.
If the Sloan Ratio is less than between -25% and -10% on the negative side, and between 10% and 25% on the positive side, this is a warning stage of accrual build up.
If the Sloan Ratio is less than -25% or greater than 25%, and this ratio is consistent over several quarters or even years, be careful. Earnings are highly likely to be made up of accruals.
As of Feb. 2023, Paychex has a Sloan Ratio of -2.20%, indicating the company is in the safe zone and there is no funny business with accruals.
Paychex Sloan Ratio % Related Terms
Thank you for viewing the detailed overview of Paychex's Sloan Ratio % provided by GuruFocus.com. Please click on the following links to see related term pages.
Paychex is a leading provider of payroll, human capital management, and insurance solutions servicing small and midsize clients primarily in the United States. The company, established in 1979, services over 730,000 clients and pays over 1 in 12 U.S. private-sector workers. Alongside its traditional payroll services, Paychex offers HCM solutions such as benefits administration and time and attendance software, as well as human resources outsourcing and insurance agency services.
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