Paychex Inc (PAYX)
Quick ratio
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,676,500 | 1,468,900 | 1,222,000 | 370,000 | 995,200 |
| Short-term investments | US$ in thousands | 34,500 | 33,900 | 373,400 | 853,900 | 36,700 |
| Receivables | US$ in thousands | 1,975,000 | 1,625,300 | 1,426,200 | 1,318,200 | 1,053,600 |
| Total current liabilities | US$ in thousands | 6,956,300 | 5,309,100 | 5,805,400 | 5,269,200 | 4,938,200 |
| Quick ratio | 0.53 | 0.59 | 0.52 | 0.48 | 0.42 |
May 31, 2025 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,676,500K
+ $34,500K
+ $1,975,000K)
÷ $6,956,300K
= 0.53
The analysis of Paychex Inc's quick ratio over the specified period indicates a gradual improvement in its liquidity position. As of May 31, 2021, the quick ratio was at 0.42, reflecting that the company's most liquid assets (excluding inventories) covered less than half of its current liabilities. By May 31, 2022, this ratio increased to 0.48, suggesting a modest enhancement in liquidity. The upward trend continued through May 31, 2023, with the ratio reaching 0.52, signaling further strengthening of short-term liquidity.
The most notable increase occurred between May 31, 2023, and May 31, 2024, when the quick ratio climbed to 0.59. This indicates a more comfortable cushion of liquid assets relative to current liabilities, implying improved capacity to meet immediate obligations without reliance on inventory liquidation or other less liquid assets. However, the ratio declined slightly to 0.53 by May 31, 2025, yet remained higher than previous years.
Overall, the consistent upward movement in Paychex Inc's quick ratio over these years reflects a positive trend in liquidity management, highlighting an increased ability to cover current liabilities with its most liquid assets. Despite the improvements, the ratio remains below 1.0 throughout the period, which generally indicates that the company still relies significantly on other sources of liquidity or longer-term assets to meet its short-term obligations.