Paychex, Inc. — Earnings Quality Grade F
PAYX · Technology
Major red flags
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO increased by 14 days
AR outpaced revenue for 2 consecutive years
Revenue 5.6%, CFFO 0.2%. Cash follows revenue
Expense Quality
No material inventory
CapEx growth 18.8% vs revenue 5.6%. Normal
SG&A/Gross Profit = 45.2%. Normal
Gross margin 72.4%, change +0.4pp. Stable
Cash Flow Quality
CFFO/NI = 1.15. Profits backed by cash
FCF $1.7B, FCF/NI = 1.03
Accruals ratio = -1.5%. Low accruals
Cash $1.7B covers only 33% of debt $5.0B
Balance Sheet Health
Goodwill+Intangibles $6.5B = 157% of equity. Over 50%
Debt/EBITDA = 2.0x. Healthy
Other assets 11.7% vs revenue 5.6%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles surged 211% YoY
Manipulation Score
M-Score = -2.13 (grey zone)
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-08