Automatic Data Processing Inc (ADP)

Quick ratio

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Cash	US$ in thousands	3,347,800	2,913,400	2,083,500	1,436,300	2,575,200
Short-term investments	US$ in thousands	4,498,800	384,000	14,700	32,700	10,400
Receivables	US$ in thousands	3,579,100	3,428,200	3,009,600	3,170,600	2,727,400
Total current liabilities	US$ in thousands	41,278,300	45,080,000	42,767,600	55,158,700	38,094,800
Quick ratio		0.28	0.15	0.12	0.08	0.14

June 30, 2025 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($3,347,800K + $4,498,800K + $3,579,100K) ÷ $41,278,300K
= 0.28

The quick ratio of Automatic Data Processing Inc. over the period from June 30, 2021, to June 30, 2025, demonstrates notable fluctuations, reflecting changes in the company's short-term liquidity position.

In June 2021, the quick ratio was recorded at 0.14, indicating that the company's liquid assets were only 14% of its current liabilities, suggesting limited ability to meet short-term obligations without relying on inventory or other less liquid assets. By June 2022, the ratio decreased further to 0.08, implying a decline in liquidity and an increased potential risk of liquidity strain.

However, a reversal trend is observed thereafter. The quick ratio improved to 0.12 in June 2023, signaling a modest enhancement in liquidity, although it remained well below the 1.0 benchmark that typically indicates sufficient liquid assets to cover current liabilities. The upward trajectory continued in June 2024, reaching 0.15, further strengthening the company's liquidity position.

Most notably, by June 2025, the quick ratio significantly increased to 0.28, representing a substantial improvement and indicating that the company's liquid assets now cover approximately 28% of its current liabilities. Although still below the ideal threshold of 1.0, this upward trend suggests progressive enhancements in cash, marketable securities, and receivables relative to short-term liabilities.

Overall, the company's quick ratio improvement over this period suggests a positive trajectory in liquidity management, though it still indicates a relatively conservative liquidity stance with room for further improvement to ensure more robust short-term financial stability.