Automatic Data Processing Inc (ADP)

Cash ratio

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Cash and cash equivalents	US$ in thousands	3,347,800	2,680,600	2,216,400	2,104,900	2,913,400	3,291,700	1,641,300	1,441,400	2,083,500	1,828,400	1,345,000	1,207,700	1,436,300	1,634,200	1,745,000	1,602,100	2,575,200	1,891,500	1,602,200	1,613,100
Short-term investments	US$ in thousands	4,498,800	—	—	5,242,200	384,000	—	24,400	14,900	14,700	26,300	16,400	24,400	32,700	27,600	19,700	28,500	10,400	10,500	10,600	3,400
Total current liabilities	US$ in thousands	9,935,000	45,845,400	54,303,100	10,651,500	45,080,000	54,901,900	48,097,700	41,228,700	42,767,600	51,536,100	46,813,700	39,166,200	55,158,700	63,106,500	49,084,000	49,669,900	38,094,800	44,615,200	39,176,500	32,329,600
Cash ratio		0.79	0.06	0.04	0.69	0.07	0.06	0.03	0.04	0.05	0.04	0.03	0.03	0.03	0.03	0.04	0.03	0.07	0.04	0.04	0.05

June 30, 2025 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($3,347,800K + $4,498,800K) ÷ $9,935,000K
= 0.79

The cash ratio of Automatic Data Processing Inc. (ADP) exhibits considerable variability over the analyzed period, revealing fluctuations in its liquidity position. From September 30, 2020, through March 31, 2022, the cash ratio remained relatively low, predominantly oscillating between 0.03 and 0.07, indicating that the company held a minimal proportion of cash and cash equivalents relative to its current liabilities. This suggests a conservative liquidity profile, typical for companies with efficient working capital management and reliance on receivables and inventories for liquidity.

Notably, in the second half of 2022, the cash ratio maintained a steady 0.03, reflecting a consistent but low level of cash liquidity relative to current obligations. Into 2023, the ratio experienced slight increases, reaching approximately 0.04 during March and June 2023, implying marginal improvements in cash holdings.

A significant and atypical deviation is observed in September 2024, where the cash ratio escalated dramatically to 0.69. This spike indicates a substantial accumulation of cash relative to short-term liabilities, potentially driven by strategic liquidity management, asset sales, anticipated expenditures, or other corporate actions that temporarily boosted cash reserves.

Subsequently, the ratio stabilized at a lower level of around 0.03 to 0.06 through March 2025, with an instance of a notable peak at 0.79 in June 2025. This latter value signifies a pronounced conservative stance, with cash holdings potentially exceeding immediate short-term obligations, possibly reflecting a strategic liquidity buffer or preparations for upcoming investments or liabilities.

Overall, the trend in ADP’s cash ratio underscores a generally conservative approach to liquidity management, punctuated by periodic increases that may reveal strategic adjustments or responses to specific corporate circumstances. The predominant low ratios suggest reliance on other liquidity sources for operations, while the occasional spikes denote periods of heightened cash accumulation or strategic liquidity positioning.