Paycom Software Inc. (NYSE:PAYC)

Current Ratio

The current ratio exhibits a steady upward trend over the five-year period, increasing from 1.03 in 2018 to 1.16 in 2022. This suggests an improving ability of the company to cover its short-term liabilities with its short-term assets, indicating strengthening liquidity and potentially better working capital management.

Quick Ratio

The quick ratio shows a notable progression, starting at a low 0.05 in 2018 and rising gradually each year to reach 0.18 in 2022. Despite remaining below 1.0, this increase signals a growing proportion of liquid assets relative to current liabilities, enhancing the company's immediate liquidity position without relying on inventory.

Cash Ratio

The cash ratio mirrors the quick ratio's trend, beginning at 0.04 in 2018 and similarly increasing to 0.17 by 2022. This reflects a consistent rise in the company's cash and cash equivalents relative to current liabilities, bolstering its ability to meet obligations using the most liquid assets available.

Current Assets

Current assets demonstrated a consistent upward trend over the period analyzed. Starting at approximately $1.06 billion in 2018, the figure rose significantly to about $2.76 billion by the end of 2022. The most substantial increases were observed between 2018 and 2019, as well as from 2021 to 2022, indicating an expansion in the company's liquid or short-term resources available for operational needs.

Current Liabilities

Current liabilities also exhibited a steady increase during the same timeframe. Beginning at roughly $1.03 billion in 2018, this amount grew to approximately $2.38 billion by 2022. The growth pattern closely mirrored that of current assets, suggesting increased obligations or operational financing needs parallel to asset growth, with consistent increases each year.

Current Ratio

The current ratio, serving as an indicator of short-term liquidity, showed a gradual improvement from 1.03 in 2018 to 1.16 in 2022. This upward trajectory reflects a strengthening in the company's ability to meet its short-term liabilities with current assets. Although the increases each year were modest, the steady trend upwards indicates improved liquidity position and potentially lower financial risk.

Quick assets and liquidity

Over the five-year period, there is a notable increase in total quick assets, rising from 49,132 thousand USD in 2018 to 423,573 thousand USD in 2022. This growth reflects an improvement in the availability of liquid assets that can convert quickly to cash.

Current liabilities trend

Current liabilities have shown a consistent upward trend, increasing from 1,028,682 thousand USD in 2018 to 2,377,037 thousand USD in 2022. This indicates a rising short-term obligation level for the company over the years.

Quick ratio analysis

The quick ratio, which measures short-term liquidity by comparing quick assets to current liabilities, has improved progressively from 0.05 in 2018 to 0.18 in 2022. Although still below 1.0, this increase demonstrates a strengthening capacity to cover current liabilities with more liquid assets.

Summary of financial position

The data reveals that while current liabilities have expanded significantly, the company's liquidity position has improved at a faster pace, as seen by the increase in both quick assets and the quick ratio. This suggests an enhanced ability to meet short-term obligations, albeit the quick ratio remains under 0.2, indicating room for further improvement in liquidity coverage.

The financial data indicates notable changes and trends across the analyzed periods.

Total cash assets

The total cash assets exhibit a consistent and substantial increase from 45,718 thousand US dollars in 2018 to 400,730 thousand US dollars in 2022. This represents nearly a ninefold increase over five years, indicating a strong accumulation of liquid resources.

Current liabilities

Current liabilities initially rose sharply from 1,028,682 thousand US dollars in 2018 to 1,753,522 thousand US dollars in 2019. Following that, the liabilities slightly decreased to 1,718,030 thousand US dollars in 2020 but then resumed an upward trend in 2021 and 2022, reaching 2,377,037 thousand US dollars. Overall, current liabilities have more than doubled from 2018 to 2022, showing increasing short-term obligations.

Cash ratio

The cash ratio mirrors the growth in cash assets relative to current liabilities, increasing steadily from 0.04 in 2018 to 0.17 in 2022. Although the ratio remains below 1, the upward trend demonstrates improving liquidity, suggesting enhanced capacity to cover current liabilities with cash and cash equivalents over time.