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Stock Analysis on Net

Automatic Data Processing Inc. (NASDAQ:ADP)

This company has been moved to the archive! The financial data has not been updated since April 29, 2022.

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity

Automatic Data Processing Inc., common-size consolidated balance sheet: liabilities and stockholders’ equity

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Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Accounts payable 0.29 0.26 0.30 0.37 0.40 0.35
Accrued expenses and other current liabilities 4.03 5.06 4.20 4.17 3.72 2.86
Accrued payroll and payroll-related expenses 1.87 1.42 1.72 1.80 1.51 1.41
Dividends payable 0.80 0.99 0.81 0.81 0.67 0.55
Short-term deferred revenues 0.42 0.54 0.53 0.61 0.63 0.53
Obligations under reverse repurchase agreements 0.05 0.03 0.63 0.00 0.00 0.00
Short-term debt 0.00 2.56 0.00 0.00 0.00 0.00
Income taxes payable 0.12 0.10 0.13 0.12 0.13 0.06
Current liabilities before client funds obligations 7.57% 10.97% 8.32% 7.87% 7.06% 5.76%
Client funds obligations 70.54 65.95 69.58 74.13 73.13 76.33
Current liabilities 78.11% 76.92% 77.89% 82.00% 80.19% 82.09%
Long-term debt 6.12 2.56 4.78 5.40 5.39 4.60
Long-term operating lease liabilities 0.70 0.88 0.00 0.00 0.00 0.00
Other liabilities 1.71 2.14 1.91 1.96 2.23 1.61
Deferred income taxes 0.99 1.87 1.58 0.29 0.44 0.57
Long-term deferred revenues 0.74 0.95 0.95 1.02 1.05 0.87
Noncurrent liabilities 10.27% 8.39% 9.22% 8.67% 9.11% 7.65%
Total liabilities 88.37% 85.31% 87.11% 90.67% 89.30% 89.74%
Preferred stock, $1.00 par value; issued, none 0.00 0.00 0.00 0.00 0.00 0.00
Common stock, $0.10 par value 0.13 0.16 0.15 0.17 0.17 0.15
Capital in excess of par value 3.14 3.41 2.82 2.74 2.33 1.76
Retained earnings 39.88 47.07 41.78 41.18 39.61 32.07
Treasury stock, at cost -31.55 -35.92 -31.25 -32.92 -30.40 -23.22
Accumulated other comprehensive income (loss) 0.02 -0.04 -0.61 -1.84 -1.02 -0.49
Stockholders’ equity 11.63% 14.69% 12.89% 9.33% 10.70% 10.26%
Total liabilities and stockholders’ equity 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

The capital structure is characterized by a high concentration of liabilities, which consistently represent between 85% and 91% of total liabilities and stockholders' equity. This high leverage is not primarily driven by traditional debt, but by the significant volume of client funds held by the organization, which constitutes the largest single component of the balance sheet.

Liability Composition and Client Fund Obligations
Client funds obligations represent the dominant portion of the total balance sheet, fluctuating from a high of 76.33% in 2016 to a low of 65.95% in 2020, before recovering to 70.54% in 2021. Because these obligations drive the majority of current liabilities, the overall liability profile remains highly sensitive to the volume of client assets managed. Other current liabilities, such as accrued expenses and payroll-related expenses, remain relatively stable, generally staying below 6% of the total capital structure.
Debt and Long-Term Obligations
Long-term debt exhibits a volatile trend, starting at 4.60% in 2016, peaking at 5.40% in 2018, and declining sharply to 2.56% in 2020 before rising to a period high of 6.12% in 2021. The emergence of long-term operating lease liabilities in 2020 (0.88%) and 2021 (0.70%) indicates a shift in how certain assets are financed or accounted for during this period.
Stockholders' Equity and Capital Management
Stockholders' equity remains a small fraction of the total balance sheet, ranging from 9.33% in 2018 to 14.69% in 2020. A significant internal tension is observed between retained earnings and treasury stock. Retained earnings grew steadily from 32.07% in 2016 to a peak of 47.07% in 2020, suggesting strong profitability. However, this growth was heavily offset by an aggressive treasury stock program, with the contra-equity account increasing from -23.22% in 2016 to -35.92% in 2020, indicating substantial share repurchases.
Comprehensive Income and Other Adjustments
Accumulated other comprehensive income (loss) remained negative for the majority of the period, reaching a low of -1.84% in 2018. A notable reversal occurred by 2021, when this figure shifted to a positive 0.02%, signaling a recovery in the valuation of other comprehensive income components.

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