Automatic Data Processing Inc (ADP)

Financial leverage 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 assets	US$ in thousands	53,369,300	56,448,600	64,096,700	49,511,400	54,362,700	64,181,600	57,069,400	49,323,600	50,971,000	59,881,800	54,453,000	46,364,700	63,068,200	72,068,100	59,102,600	59,987,200	48,772,500	54,407,700	49,325,900	42,390,100
Total stockholders’ equity	US$ in thousands	6,188,000	5,855,300	5,078,100	5,348,600	4,547,600	4,626,700	4,319,600	3,472,800	3,509,100	3,693,800	2,986,700	2,576,500	3,225,300	4,192,900	5,049,600	5,350,700	5,670,100	5,673,900	5,900,000	5,808,900
Financial leverage ratio		8.62	9.64	12.62	9.26	11.95	13.87	13.21	14.20	14.53	16.21	18.23	18.00	19.55	17.19	11.70	11.21	8.60	9.59	8.36	7.30

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 (ADP) has demonstrated fluctuations over the period analyzed, reflecting varying levels of leverage employed by the company. Starting at a ratio of 7.30 as of September 30, 2020, there was a notable upward trend reaching a peak of 19.55 by June 30, 2022. This significant increase indicates that the company adopted higher leverage, likely through increased debt financing, to support its operations or strategic initiatives during this period.

Following this peak, the leverage ratio exhibited a downward trend, declining to 14.20 by September 30, 2023. This reduction may suggest efforts to deleverage, improve debt management, or a strategic shift towards lower financial risk. Despite this decline, the ratio remained above the levels observed prior to the increase, indicating a still relatively leveraged position compared to the early period.

From the end of 2023 through mid-2025, the ratio continued to fluctuate, with values such as 12.62 at December 31, 2023, decreasing further to 9.64 by March 2025, and slightly rising again to 8.62 by June 2025. These movements reflect ongoing adjustments in the company's capital structure, possibly influenced by operational cash flows, debt repayments, or changes in equity structure.

Overall, the historical pattern of ADP’s financial leverage ratio indicates periods of increased leverage linked to strategic financing decisions, followed by phases of repayment or deleveraging strategies. The ratio's current levels suggest a moderate leverage position, aligning with prudent financial management to balance growth opportunities with risk mitigation.