Paychex Inc (PAYX)
Current ratio
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 7,251,500 | 7,528,100 | 6,581,600 | 6,169,500 | 5,464,600 |
| Total current liabilities | US$ in thousands | 5,309,100 | 5,805,400 | 5,269,200 | 4,938,200 | 4,426,900 |
| Current ratio | 1.37 | 1.30 | 1.25 | 1.25 | 1.23 |
May 31, 2024 calculation
Current ratio = Total current assets ÷ Total current liabilities
= $7,251,500K ÷ $5,309,100K
= 1.37
The current ratio, which measures a company's ability to cover its short-term obligations with its current assets, has shown a positive trend for Paychex Inc in recent years. As of May 31, 2024, the current ratio was 1.37, indicating that the company had $1.37 in current assets for every $1 of current liabilities.
This represents an improvement compared to the previous four years, where the current ratio ranged from 1.23 to 1.30. The increasing current ratio suggests that Paychex Inc has strengthened its liquidity position over time, as it now has a higher level of current assets relative to current liabilities.
A current ratio above 1 typically signifies that a company has an adequate level of current assets to meet its short-term liabilities. In the case of Paychex Inc, the current ratio has been consistently above 1, which indicates a healthy liquidity position that enables the company to fulfill its immediate financial obligations.
Overall, the upward trend in Paychex Inc's current ratio reflects a positive liquidity position and suggests that the company is effectively managing its short-term financial obligations.