Automatic Data Processing Inc (ADP)

Financial leverage ratio

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Total assets	US$ in thousands	53,369,300	54,362,700	50,971,000	63,068,200	48,772,500
Total stockholders’ equity	US$ in thousands	6,188,000	4,547,600	3,509,100	3,225,300	5,670,100
Financial leverage ratio		8.62	11.95	14.53	19.55	8.60

June 30, 2025 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $53,369,300K ÷ $6,188,000K
= 8.62

The financial leverage ratio of Automatic Data Processing Inc. demonstrates notable fluctuations over the analyzed period from June 30, 2021, to June 30, 2025. At the end of fiscal year 2021, the ratio stood at 8.60, indicating a moderate level of debt relative to equity. This ratio increased significantly by June 30, 2022, reaching 19.55, suggesting a substantial rise in leverage, likely due to increased borrowing or debt financing activities.

Subsequently, the ratio decreased to 14.53 by June 30, 2023, signaling a reduction in leverage, although it remained higher than the 2021 level. This decline could reflect debt repayments or a shift toward more equity financing. The downward trend continued into June 30, 2024, with the ratio further decreasing to 11.95, suggesting a continued effort to deleverage or a decrease in the overall debt levels.

By June 30, 2025, the ratio further declined to 8.62, approaching the earlier levels observed in 2021. This trajectory indicates a trend toward reduced financial leverage over the recent year, potentially implying a strategic shift towards lower debt reliance and a more conservative capital structure.

Overall, the pattern of the financial leverage ratio reflects periods of aggressive leverage, particularly in 2022, followed by a sustained deleveraging trend in subsequent years. The ratio’s movement suggests the company's efforts to optimize its capital structure, balancing debt and equity to manage financial risk effectively.