Automatic Data Processing Inc (ADP)

Cash ratio

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Cash and cash equivalents	US$ in thousands	2,913,400	2,083,500	1,436,300	2,575,200	1,908,500
Short-term investments	US$ in thousands	384,000	14,700	47,000	10,400	0
Total current liabilities	US$ in thousands	45,080,000	42,767,600	55,158,700	38,094,800	30,126,600
Cash ratio		0.07	0.05	0.03	0.07	0.06

June 30, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($2,913,400K + $384,000K) ÷ $45,080,000K
= 0.07

The cash ratio of Automatic Data Processing Inc has fluctuated over the past five years, ranging from 0.03 to 0.07. The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet short-term obligations.

In 2024, the cash ratio increased to 0.07 from 0.05 in 2023, suggesting an improvement in the company's liquidity position. This increase could be attributed to better cash management practices or an increase in cash holdings relative to short-term liabilities.

Comparing the latest ratio of 0.07 to 0.06 in 2020, there seems to be a slight improvement in liquidity over the past five years. However, it is important to note that the ratio was also 0.07 in 2021, indicating relative stability in the company's ability to meet short-term obligations with its available cash.

Overall, while the cash ratio of Automatic Data Processing Inc has shown some fluctuations, the recent improvement in 2024 suggests a healthier liquidity position compared to previous years. Keeping a close eye on this ratio will be important for assessing the company's short-term financial health and ability to weather any unforeseen challenges.