GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » Paychex Inc (NAS:PAYX) » Definitions » Altman Z-Score

Paychex (Paychex) Altman Z-Score : 5.63 (As of Jul. 12, 2024)


View and export this data going back to 1983. Start your Free Trial

What is Paychex Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Good Sign:

Altman Z-score of 5.59 is strong.

Paychex has a Altman Z-Score of 5.63, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Paychex's Altman Z-Score or its related term are showing as below:

PAYX' s Altman Z-Score Range Over the Past 10 Years
Min: 3.54   Med: 4.24   Max: 5.69
Current: 5.59

During the past 13 years, Paychex's highest Altman Z-Score was 5.69. The lowest was 3.54. And the median was 4.24.


Paychex Altman Z-Score Historical Data

The historical data trend for Paychex's Altman Z-Score 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 Altman Z-Score Chart

Paychex Annual Data
Trend May15 May16 May17 May18 May19 May20 May21 May22 May23 May24
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 4.12 4.82 5.60 4.81 5.69

Paychex Quarterly Data
Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24 May24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.81 4.49 4.51 4.23 5.69

Competitive Comparison of Paychex's Altman Z-Score

For the Staffing & Employment Services subindustry, Paychex's Altman Z-Score, along with its competitors' market caps and Altman Z-Score 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's Altman Z-Score Distribution in the Business Services Industry

For the Business Services industry and Industrials sector, Paychex's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Paychex's Altman Z-Score falls into.



Paychex Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

Paychex's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.1871+1.4*0.2131+3.3*0.2172+0.6*6.4622+1.0*0.5084
=5.63

* 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. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in May. 2024:
Total Assets was $10,383 Mil.
Total Current Assets was $7,252 Mil.
Total Current Liabilities was $5,309 Mil.
Retained Earnings was $2,213 Mil.
Pre-Tax Income was 491.8 + 659.2 + 517.9 + 549.1 = $2,218 Mil.
Interest Expense was -9.5 + -9.9 + -8.5 + -9.4 = $-37 Mil.
Revenue was 1295.1 + 1439.3 + 1257.9 + 1286 = $5,278 Mil.
Market Cap (Today) was $42,535 Mil.
Total Liabilities was $6,582 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(7251.5 - 5309.1)/10383.1
=0.1871

X2=Retained Earnings/Total Assets
=2213/10383.1
=0.2131

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(2218 - -37.3)/10383.1
=0.2172

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=42534.589/6582.1
=6.4622

X5=Revenue/Total Assets
=5278.3/10383.1
=0.5084

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Paychex has a Altman Z-Score of 5.63 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Paychex  (NAS:PAYX) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Paychex Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Paychex's Altman Z-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Paychex (Paychex) Business Description

Traded in Other Exchanges
Address
911 Panorama Trail South, Rochester, NY, USA, 14625-2396
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 740,000 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.
Executives
Flaschen David J S director 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Christopher C Simmons officer: VP, Controller & Treasurer 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Michael E Gioja officer: Sr. Vice President 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Efrain Rivera officer: Sr. Vice President, CFO 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Martin Mucci officer: Sr. Vice President 911 PANORAMA TRAIL S, ROCHESTER NY 14625
Joseph M Tucci director EMC CORPORATION, 176 SOUTH STREET, HOPKINTON MA 01748
Joseph M Velli director
Elizabeth Roaldsen officer: Sr. Vice President 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Karen E. Saunders-mcclendon officer: VP, Chief Human Resources Offi 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Theresa M. Payton director 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
John B Gibson officer: Sr. VP, Service CONVERGYS CORPORATION, 201 EAST FOURTH STREET, CINCINNATI OH 45202
Mark Anthony Bottini officer: Sr. VP of Sales 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Robert L. Schrader officer: VP/Controller 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Stephanie L Schaeffer officer: Chief Legal Officer 911 PANORAMA TRAIL SOUTH, ROCHESTER NY 14625
Joseph Doody director CASELLA WASTE SYSTEMS INC, 25 GREENS HILL LANE PO BOX 866, RUTLAND VT 05701

Paychex (Paychex) Headlines

From GuruFocus

Q4 2020 Paychex Inc Earnings Call Transcript

By GuruFocus Research 01-23-2024

Q3 2021 Paychex Inc Earnings Call Transcript

By GuruFocus Research 01-23-2024

Q4 2021 Paychex Inc Earnings Call Transcript

By GuruFocus Research 01-23-2024

Q2 2021 Paychex Inc Earnings Call Transcript

By GuruFocus Research 01-23-2024

Paychex Inc Annual Shareholders Meeting Transcript

By GuruFocus Research 01-23-2024

Q3 2023 Paychex Inc Earnings Call Transcript

By GuruFocus Research 01-23-2024

Q4 2019 Paychex Inc Earnings Call Transcript

By GuruFocus Research 01-23-2024