Stock Analysis on Net
Stock Analysis on Net

Paycom Software Inc. (NYSE:PAYC)

This company has been moved to the archive! The financial data has not been updated since November 2, 2023.

Analysis of Liquidity Ratios 
Quarterly Data

Microsoft Excel

Liquidity ratios measure the company ability to meet its short-term obligations.

Liquidity Ratios (Summary)

Paycom Software Inc., liquidity ratios (quarterly data)

Microsoft Excel
Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.24 1.24 1.19 1.16 1.17 1.08 1.08 1.13 1.07 1.10 1.08 1.09 1.09 1.11 1.10 1.07 1.10 1.07 1.04
Quick ratio 0.24 0.25 0.20 0.18 0.17 0.08 0.09 0.14 0.08 0.10 0.10 0.09 0.10 0.11 0.13 0.08 0.12 0.08 0.06
Cash ratio 0.23 0.25 0.20 0.17 0.17 0.08 0.09 0.14 0.07 0.09 0.09 0.09 0.10 0.10 0.12 0.08 0.12 0.08 0.06

Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).

The analysis of the quarterly liquidity ratios over the observed periods reveals several noteworthy trends and shifts.

Current Ratio
The current ratio showed a general upward trend from early 2019 to late 2023. Starting at 1.04 in March 2019, it fluctuated moderately around 1.07 to 1.11 through 2019 and 2020 before steadily increasing from 1.08 in March 2022 to 1.24 by September 2023. This indicates a gradual improvement in the company's ability to cover its short-term liabilities with current assets over time, reflecting potentially stronger liquidity management or growth in current assets relative to current liabilities.
Quick Ratio
The quick ratio, representing the company's ability to meet short-term obligations without relying on inventory sales, experienced a generally positive trajectory. Starting at a low 0.06 in March 2019, the ratio increased with some volatility over time. Notable jumps occurred around December 2021 (0.14) and again from March 2022 onward, reaching 0.25 by September 2023. Despite its low absolute values relative to the current ratio, this upward trend suggests improved liquidity in more liquid assets, indicating greater ease in meeting immediate liabilities.
Cash Ratio
The cash ratio followed a pattern very similar to the quick ratio levels, beginning at 0.06 in the first quarter of 2019 and gradually increasing to a peak of 0.25 in September 2023. Minor fluctuations were observed, including some matching declines in mid-2022; however, the overall increase highlights enhanced cash and cash equivalents relative to current liabilities. This indicates a stronger cash position, affording the company high short-term financial flexibility.

In summary, the company’s liquidity ratios have shown consistent improvement over the period analyzed. The current ratio's steady rise signals a safer liquidity position, with assets increasingly able to cover short-term obligations. Similarly, the sharp increases in the quick and cash ratios, particularly since early 2022, underscore a strengthening in liquid asset availability. This suggests an enhanced capacity to meet immediate financial responsibilities without relying on inventory liquidation, reflecting a favorable liquidity trend and potentially more conservative or effective cash and working capital management strategies.

Current Ratio

Paycom Software Inc., current ratio calculation (quarterly data)

Microsoft Excel
Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Selected Financial Data (US$ in thousands)
Current assets 2,562,966 2,708,194 3,054,691 2,764,172 2,228,362 3,847,992 4,434,296 2,252,038 3,313,182 2,356,522 2,624,207 1,864,605 1,778,316 1,240,058 1,651,561 1,871,100 1,012,975 1,287,986 1,549,484
Current liabilities 2,069,910 2,186,727 2,565,098 2,377,037 1,897,755 3,568,472 4,112,531 1,990,410 3,086,273 2,145,208 2,425,574 1,718,030 1,627,801 1,117,251 1,497,915 1,753,522 918,478 1,201,278 1,483,710
Liquidity Ratio
Current ratio1 1.24 1.24 1.19 1.16 1.17 1.08 1.08 1.13 1.07 1.10 1.08 1.09 1.09 1.11 1.10 1.07 1.10 1.07 1.04

Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).

1 Q3 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 2,562,966 ÷ 2,069,910 = 1.24

The analysis of the quarterly financial data over the observed periods reveals several noteworthy trends with respect to liquidity and working capital management. The current assets and current liabilities have shown significant fluctuations, though the overall relationship between these two metrics has remained within a relatively stable range, as reflected by the current ratio values.

Current Assets
There is a notable variability in current assets, with levels initially declining from approximately $1.55 billion at the start of 2019 to about $1.01 billion by September 2019. A substantial recovery follows, with peaks exceeding $4.4 billion observed in early 2022. Following this peak, current assets exhibit volatility but generally maintain values above $2 billion, ending the latest periods around $2.56 billion.
Current Liabilities
Current liabilities exhibit a broadly similar trend to current assets, starting at approximately $1.48 billion in early 2019 and decreasing to approximately $918 million by September 2019. Subsequently, liabilities increase significantly, reaching over $4.1 billion in early 2022. After this peak, current liabilities also fluctuate but show a declining tendency, ending the latest period near $2.07 billion.
Current Ratio
The current ratio remains consistently above 1 throughout all quarters, indicating that current assets exceed current liabilities during the entire period, which suggests adequate short-term liquidity. The ratio fluctuates modestly between approximately 1.04 and 1.24, with a gradual upward trend observed from mid-2022 through 2023. The highest values occur in the recent quarters (1.24), implying a strengthening liquidity position relative to the start of the dataset.

In summary, the company demonstrates a generally stable ability to meet short-term obligations, with liquidity improving modestly over time as indicated by rising current ratios. However, both current assets and current liabilities have experienced significant variation, including sharp increases in early 2022, which may warrant further qualitative context to understand the underlying causes. Overall, the current ratio’s maintenance above the critical threshold of 1.0 throughout the entire period reflects prudent current asset and liability management.

Quick Ratio

Paycom Software Inc., quick ratio calculation (quarterly data)

Microsoft Excel
Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Selected Financial Data (US$ in thousands)
Cash and cash equivalents 484,028 536,545 505,590 400,730 317,163 279,039 360,594 277,978 230,926 202,362 215,093 151,710 156,398 113,518 181,827 133,667 108,127 94,814 91,307
Accounts receivable 15,548 16,193 17,802 22,843 14,896 20,078 17,945 9,490 13,004 19,905 19,792 9,130 12,355 9,295 8,059 9,298 2,609 2,850 3,835
Total quick assets 499,576 552,738 523,392 423,573 332,059 299,117 378,539 287,468 243,930 222,267 234,885 160,840 168,753 122,813 189,886 142,965 110,736 97,664 95,142
 
Current liabilities 2,069,910 2,186,727 2,565,098 2,377,037 1,897,755 3,568,472 4,112,531 1,990,410 3,086,273 2,145,208 2,425,574 1,718,030 1,627,801 1,117,251 1,497,915 1,753,522 918,478 1,201,278 1,483,710
Liquidity Ratio
Quick ratio1 0.24 0.25 0.20 0.18 0.17 0.08 0.09 0.14 0.08 0.10 0.10 0.09 0.10 0.11 0.13 0.08 0.12 0.08 0.06

Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).

1 Q3 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 499,576 ÷ 2,069,910 = 0.24

The analysis of the quarterly financial data reveals notable trends in liquidity measures over the observed periods. Total quick assets exhibit a general upward trajectory, with occasional fluctuations. Starting from approximately $95 million at the end of March 2019, these assets increased significantly, reaching a peak of over $523 million at the end of March 2023. There is a slight decline in the most recent quarter compared to the previous one, indicating some volatility but overall growth.

Current liabilities show considerable variability across the quarters without a clear consistent pattern. The values fluctuate significantly, reaching lows below $1 billion and highs exceeding $4 billion. This variability suggests changing short-term obligations, with some quarters indicating substantial increases in liabilities and others showing reductions. The peak liability level was observed in March 2022, followed by a decreasing trend through the subsequent quarters to March 2023.

The quick ratio, which measures the company's ability to cover current liabilities with quick assets, remains consistently low throughout the period. Starting at a very low 0.06 ratio at the beginning of the observed timeline, it shows some incremental improvement, moving toward 0.25 most recently. Despite this improvement, the ratio remains below 1, indicating that quick assets are insufficient to cover current liabilities fully at any point. This low liquidity ratio highlights a potential risk in short-term financial stability.

In summary, while quick assets have generally increased significantly, the company's current liabilities have demonstrated marked volatility with some very high peaks. The improvement in the quick ratio suggests a modest enhancement in liquidity over time; however, the persistent values well below 1 emphasize ongoing liquidity constraints. These patterns suggest an increasing scale of operations or financial activity, accompanied by a continued reliance on short-term liabilities, necessitating vigilant liquidity management.

Cash Ratio

Paycom Software Inc., cash ratio calculation (quarterly data)

Microsoft Excel
Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Selected Financial Data (US$ in thousands)
Cash and cash equivalents 484,028 536,545 505,590 400,730 317,163 279,039 360,594 277,978 230,926 202,362 215,093 151,710 156,398 113,518 181,827 133,667 108,127 94,814 91,307
Total cash assets 484,028 536,545 505,590 400,730 317,163 279,039 360,594 277,978 230,926 202,362 215,093 151,710 156,398 113,518 181,827 133,667 108,127 94,814 91,307
 
Current liabilities 2,069,910 2,186,727 2,565,098 2,377,037 1,897,755 3,568,472 4,112,531 1,990,410 3,086,273 2,145,208 2,425,574 1,718,030 1,627,801 1,117,251 1,497,915 1,753,522 918,478 1,201,278 1,483,710
Liquidity Ratio
Cash ratio1 0.23 0.25 0.20 0.17 0.17 0.08 0.09 0.14 0.07 0.09 0.09 0.09 0.10 0.10 0.12 0.08 0.12 0.08 0.06

Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).

1 Q3 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 484,028 ÷ 2,069,910 = 0.23

The analysis of the quarterly financial data reveals several notable trends and fluctuations over the examined periods.

Total Cash Assets
The total cash assets have generally exhibited an upward trajectory from March 2019 to September 2023. Starting at approximately $91.3 million in March 2019, cash assets increased steadily with some fluctuations, reaching a peak of about $536.5 million in June 2023 before slightly decreasing to around $484 million in September 2023. This trend indicates a substantial accumulation of cash reserves over the period, suggesting effective liquidity management and possibly increased cash inflows from operating or financing activities.
Current Liabilities
Current liabilities have exhibited significant volatility throughout the observed timeframe. Beginning at approximately $1.48 billion in March 2019, the figure fluctuated with notable peaks and troughs, reaching a high of around $4.11 billion in March 2022. Following this peak, current liabilities experienced a marked decline to $1.9 billion by September 2022, then rose again towards mid-2023, stabilizing somewhat below $2.1 billion towards the end of the observed period. These swings may reflect variations in short-term obligations possibly linked to operational cycles, debt refinancing, or other strategic liabilities management.
Cash Ratio
The cash ratio has demonstrated a general improvement over the reported quarters. Initially low at 0.06 in March 2019, it rose intermittently to reach 0.25 by June 2023, before slightly decreasing to 0.23 in September 2023. This ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, suggests an enhanced liquidity position, especially notable from 2021 onwards. The fluctuations in this ratio align with the variations seen in cash assets and current liabilities, indicating that despite the volatility in liabilities, cash holdings have increased at a faster pace, improving short-term financial stability.

Overall, the financial data depicts a company progressively strengthening its liquidity buffer while managing fluctuating current liabilities. The rising cash assets and improved cash ratios suggest a focus on maintaining robust short-term financial health, which could provide resilience against operational uncertainties or market fluctuations. However, the notable volatility in current liabilities warrants attention for potential risks associated with short-term obligations.