Automatic Data Processing Inc (ADP)

Current 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
Total current assets	US$ in thousands	12,266,500	46,536,800	54,254,400	39,911,200	45,542,500	55,639,600	48,543,400	40,480,100	42,170,600	51,518,200	46,143,600	37,968,800	54,804,900	63,903,800	51,107,300	52,047,900	40,741,800	46,752,400	41,662,300	34,815,400
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
Current ratio		1.23	1.02	1.00	3.75	1.01	1.01	1.01	0.98	0.99	1.00	0.99	0.97	0.99	1.01	1.04	1.05	1.07	1.05	1.06	1.08

June 30, 2025 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $12,266,500K ÷ $9,935,000K
= 1.23

The analysis of Automatic Data Processing Inc.’s current ratio over the specified periods indicates a generally stable liquidity position throughout the fiscal years 2020 to mid-2024. The current ratio remained relatively consistent, with values fluctuating marginally around the 1.00 to 1.08 range, suggesting that the company maintained a modest buffer of current assets over current liabilities during this period.

From September 30, 2020, through September 30, 2024, the ratio exhibited slight declines and increases, maintaining close to 1.00—a benchmark indicating that current assets approximately balanced current liabilities. This stability signifies prudent liquidity management, as the company appears capable of meeting its short-term obligations without excessive liquidity reserves or liquidity constraints.

However, notable deviations are observed as of September 30, 2024, where the current ratio dramatically surges to 3.75. This substantial increase may imply a significant accumulation of current assets relative to current liabilities, potentially due to changes in asset composition, such as increased receivables, inventory buildup, or a reduction in current liabilities. Such a spike warrants further examination to understand whether it reflects strategic asset management, a one-time accumulation, or other financial adjustments.

Subsequent periods show the ratio reverting closer to 1.00, with values like 1.00 on December 31, 2024, and slight increases thereafter, reaching 1.23 by June 30, 2025. These figures suggest a return toward a more typical liquidity position, providing a balanced view of short-term financial health.

Overall, the historical trend indicates a predominantly stable liquidity profile, with the exception of the pronounced peak in late 2024, which merits deeper analysis to assess underlying reasons and potential implications for the company's operational efficiency and financial strategy.