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Paychex earnings quality score

How much of the reported profit is backed by cash, and how many markers of managed earnings the filings show

Score72 / 100 · grade B · rank 249 of 1027

Paychex (PAYX) scores 72 of 100 for earnings quality, grade B: rank 249 of 1027 companies and 46 of 287 in industrials. It loses the most points on accruals of -4.9% of assets, lower than 57% of companies (profit backed by cash), discretionary accruals of -2.5% of assets (modified Jones), smaller than most, adjusted earnings 11% below GAAP. It earns full or near-full marks for Montier C-score 0 of 4 checks failed, profit about as variable as cash flow (smoothness 2.50).

What earned and lost points

ComponentWhat the filings showPointsOf
Accrualsaccruals of -4.9% of assets, lower than 57% of companies (profit backed by cash)1629
Montier C-scoreMontier C-score 0 of 4 checks failed2121
Discretionary accrualsdiscretionary accruals of -2.5% of assets (modified Jones), smaller than most814
Piotroski F-scorePiotroski F-score 6 of 91014
Non-GAAP gapadjusted earnings 11% below GAAP914
Earnings smoothnessprofit about as variable as cash flow (smoothness 2.50)77
PAYX: share of the available points, by componentPAYX: share of the available points, by componentAccruals57%Discretionary accruals59%Montier C-score100%Piotroski F-score66%Non-GAAP gap64%Earnings smoothness100%

How the score is built

Eight published measures, each scored against the whole universe or on its own scale and weighted: accruals 20, discretionary accruals 10, Beneish M 15, Dechow F 15, Montier C 15, Piotroski F 10, the non-GAAP gap 10, smoothness 5. A measure that cannot be computed (Beneish for a bank, say) drops out and the rest is rescaled, so every company is scored on what applies to it.

Every company ranked → The full quality workbench, live → Paychex: cash flow →

Computed from the companies’ own XBRL filings (latest fiscal year) by published formulas; a statistical screen, not an audit or an accusation. A low score means the reported profit shows more of the markers of managed or low-quality earnings than its peers. Not investment advice.