Paycom Software Inc. (NYSE:PAYC)

Debt to Equity Trends

The debt to equity ratio demonstrates a consistent downward trend from 0.10 in 2018 to 0.02 in 2022, indicating a steady reduction in reliance on debt financing relative to equity. When including operating lease liabilities, the ratio is higher but also shows a decline from 0.10 in 2018 to 0.06 in 2022, suggesting improved financial structure with a decreasing proportion of debt and lease obligations over equity.

Debt to Capital Trends

Debt to capital ratios follow a similar pattern with a decline from 0.09 in 2018 to 0.02 in 2022, reflecting reduced use of debt within the capital structure. Including operating lease liabilities, the ratio remains elevated but decreases from 0.09 in 2018 to 0.06 in 2022, indicating that lease liabilities form a notable part of total capital but are also being managed downward.

Debt to Assets Trends

Debt to assets ratio is low and stable at 0.01 to 0.02 across the years, both excluding and including operating lease liabilities. This reflects a conservative asset financing policy with minimal debt relative to total assets.

Financial Leverage

The financial leverage ratio decreased from 4.55 in 2018 to 3.3 in 2022, illustrating a gradual reduction in the use of debt to amplify equity returns. This reduction in leverage points toward a strengthening equity base or reduced borrowing over time.

Interest Coverage Ratio

The interest coverage ratio is notably high, peaking extraordinarily at 9787.11 in 2020, indicating exceptional ability to cover interest expenses that year. However, the 2021 data is missing, and the ratio declines to 154.62 in 2022, which while lower than prior peaks, still evidences a strong capacity to meet interest obligations comfortably.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio shows relative stability with minor fluctuations, ranging from 17.43 in 2020 to 27.26 in 2022. The increase towards 2022 reflects an improving ability to cover fixed charges such as lease and debt costs, signaling stronger operational cash flow or reduced fixed financial obligations.

Overall Insight

The data reveals a consistent trend toward reducing debt utilization and financial leverage, enhanced coverage of fixed and interest expenses, and a stable, conservative capital structure. These patterns suggest strengthened financial health, greater resilience, and prudent management of liabilities and fixed commitments over the five-year period.

Total Debt

The total debt of the company exhibits a consistent downward trend throughout the observed period. It decreased from 34,389 thousand US dollars at the end of 2018 to 29,000 thousand US dollars by the end of 2022. This gradual reduction suggests a deliberate effort to manage and reduce liabilities over the five-year span.

Stockholders’ Equity

Stockholders’ equity shows a strong and steady increase over the period analyzed. Starting at 334,753 thousand US dollars in 2018, it rose significantly each year, reaching 1,182,607 thousand US dollars by the end of 2022. This substantial growth indicates robust capital accumulation and possibly retained earnings expansion, reflecting increased net worth and financial strength.

Debt to Equity Ratio

The debt to equity ratio has declined progressively from 0.1 in 2018 to 0.02 in 2022. This decline aligns with the simultaneous decrease in total debt and increase in stockholders’ equity, signaling an improvement in the company’s leverage position. It suggests the company is becoming less reliant on debt financing and strengthening its equity base, enhancing financial stability and reducing risk exposure.

Total Debt (including operating lease liability)

The total debt has shown a general upward trend over the five-year period. Beginning at approximately $34.4 million in 2018, it nearly doubled by 2019 to $61.3 million. There was a slight decline in 2020 to about $58.8 million, followed by a relatively stable figure around $60.1 million in 2021. The total debt then increased again in 2022 to $70.0 million, representing the highest level in the observed period.

Stockholders’ Equity

Stockholders’ equity consistently increased throughout the five years, demonstrating strong equity growth. Starting at approximately $334.8 million in 2018, equity rose to $526.6 million in 2019 and continued to grow to $655.6 million in 2020. The upward trend accelerated in subsequent years, reaching $893.7 million in 2021 and culminating at $1.18 billion in 2022. This steady growth indicates increasing net assets and potentially enhanced shareholder value.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio exhibited a declining pattern, indicating that the company’s leverage relative to its equity is decreasing over time. Starting at 0.10 in 2018, the ratio rose slightly to 0.12 in 2019 but then declined to 0.09 in 2020. The trend continued downward to 0.07 in 2021 and further to 0.06 in 2022. This suggests improved financial stability and a lower reliance on debt financing relative to equity as the shareholder base expands.

Summary

Overall, the data reflect a company that is expanding its equity base significantly while managing its debt levels in a way that reduces relative leverage over time. Despite some fluctuations in total debt, the substantial increase in stockholders’ equity has led to a consistent decline in the debt to equity ratio, indicating a strengthening financial position. The incremental rise in total debt toward the latter years, in the context of growing equity, suggests a strategic use of leverage that remains conservative relative to the company’s net worth.

Total Debt

There is a consistent decline in total debt over the five-year period. Starting at $34,389 thousand in 2018, the debt decreased annually to reach $29,000 thousand by 2022. This demonstrates a gradual reduction in leverage from a nominal standpoint.

Total Capital

Total capital shows a significant and steady increase throughout the same period. It rose from $369,142 thousand in 2018 to $1,211,607 thousand in 2022. The growth is particularly pronounced, indicating considerable capital expansion and likely reflecting increased equity or retained earnings.

Debt to Capital Ratio

The debt to capital ratio exhibits a declining trend, moving from 0.09 in 2018 down to 0.02 by 2022. This decreasing ratio aligns with the observed reduction in total debt and the simultaneous strong growth in total capital, suggesting enhanced financial stability and a lower reliance on debt financing relative to capital.

Total Debt (including operating lease liability)

The total debt experienced a marked increase from 34,389 thousand US dollars in 2018 to 61,318 thousand in 2019, representing nearly an 80% rise. Subsequently, the debt levels somewhat stabilized, slightly decreasing to 58,790 thousand in 2020, followed by a modest increase to 60,067 thousand in 2021, and a further rise to 70,012 thousand in 2022. Overall, the debt level more than doubled over the five-year period, with fluctuations but an upward trajectory toward the end of the period.

Total Capital (including operating lease liability)

Total capital demonstrated consistent and substantial growth during the timeframe analyzed. Starting at 369,142 thousand US dollars in 2018, the figure increased sharply to 587,946 thousand in 2019, then continued its upward trend reaching 714,433 thousand in 2020. The growth accelerated in subsequent years, with capital rising to 953,781 thousand in 2021 and ultimately reaching 1,252,619 thousand in 2022. This represents more than a threefold increase in total capital over the five years, indicating significant expansion of the company's financial base.

Debt to Capital Ratio (including operating lease liability)

The ratio of debt to capital remained relatively low throughout the period, reflecting a conservative debt structure relative to the company's capital base. In 2018, the ratio was 0.09, then it increased slightly to 0.10 in 2019 despite a large increase in both debt and capital. Afterward, the ratio steadily decreased each year to 0.08 in 2020, and further down to 0.06 in both 2021 and 2022. This decline amid substantial capital growth suggests improved leverage management, with debt comprising a smaller proportion of total capital over time.

Total Debt

The total debt showed a consistent decreasing trend over the five-year period. Beginning at approximately $34.4 million in 2018, it gradually declined annually to reach $29.0 million by the end of 2022. This reduction suggests a deliberate effort to lower leverage or improve debt management.

Total Assets

Total assets exhibited a robust and steady increase across the analyzed years. From around $1.52 billion at the end of 2018, total assets expanded significantly each year, culminating at roughly $3.90 billion in 2022. This strong growth indicates an overall expansion of the company's asset base, potentially reflecting business growth, acquisitions, or capital investments.

Debt to Assets Ratio

The debt to assets ratio maintained a very low and stable level throughout the period. Starting at 0.02 in 2018, it decreased slightly to 0.01 from 2019 onwards and remained consistent at that low level through 2022. This low ratio points to a conservative capital structure with limited reliance on debt relative to the asset base.

The financial data reveals consistent trends in the company's debt level relative to its asset base over the five-year period.

Total Debt (including operating lease liability)

The total debt increased from $34.389 million in 2018 to $70.012 million in 2022, reflecting a more than doubling of the debt amount. The debt rose steadily from 2018 through 2019, slightly declined in 2020, then increased again in 2021 and 2022, reaching the highest recorded amount in the latest year.

Total Assets

The asset base expanded significantly, growing from approximately $1.522 billion in 2018 to $3.903 billion in 2022. This represents a strong upward trajectory, with assets increasing each year without decline, indicating ongoing growth and investment in resources.

Debt to Assets Ratio (including operating lease liability)

This ratio remained stable at 0.02 (or 2%) throughout the entire period from 2018 to 2022. Despite the growth in absolute debt amount, the proportional relationship between debt and assets did not change, implying that debt was managed in line with asset growth and the company maintained a low leverage level.

Overall, the data exhibit a pattern of substantial asset growth accompanied by a controlled increase in debt, maintaining a consistent and low debt-to-asset ratio. This suggests a conservative approach to leverage, supporting the company's expansion with a strong asset base and moderate reliance on debt financing.

Total Assets

The total assets exhibit a consistent upward trend over the five-year period. Starting at approximately $1.52 billion in 2018, the assets increased significantly each year, reaching around $3.9 billion by the end of 2022. This steady growth reflects a strong expansion in the company’s asset base.

Stockholders’ Equity

Stockholders’ equity similarly shows a robust growth trajectory, increasing from about $335 million in 2018 to approximately $1.18 billion in 2022. This rise indicates an improvement in the company’s net worth and suggests successful retention of earnings or issuance of equity capital over the period.

Financial Leverage

The financial leverage ratio reveals a declining trend, decreasing from 4.55 in 2018 to 3.3 in 2022. This reduction suggests the company is relying less on debt relative to equity, indicating an improved capital structure with potentially lower financial risk.

Earnings Before Interest and Tax (EBIT)

Over the five-year period, EBIT demonstrated a generally upward trend with some fluctuations. Beginning at approximately $175.5 million in 2018, EBIT increased significantly to around $227 million in 2019. However, there was a notable decline in 2020 to about $186 million. Following this dip, EBIT resumed growth, climbing to approximately $256 million in 2021 and then sharply rising to $392.1 million in 2022. This progression indicates overall strong operational profitability with a temporary setback in 2020.

Interest Expense

Interest expense started relatively low at $0.77 million in 2018 and increased modestly to $0.94 million in 2019. It then dropped dramatically to $0.019 million in 2020, signaling a significant reduction in interest costs or debt service that year. Interest expense data for 2021 is missing, followed by a noticeable increase to $2.54 million in 2022, which could reflect increased borrowing or changes in interest rates.

Interest Coverage Ratio

The interest coverage ratio exhibited extreme variability during the period. It was very high at 229.08 times in 2018 and increased further to 241.52 times in 2019, reflecting strong capacity to meet interest obligations from operating earnings. In 2020, the ratio soared to an exceptionally high figure of 9,787.11, likely due to dramatically reduced interest expense that year. There is no data for 2021, but in 2022, the ratio fell to 154.62 times, still indicating a robust ability to cover interest despite the increase in interest expense.

Summary

The financial data illustrate strong and improving operational profitability as evidenced by increasing EBIT, with a temporary decline in 2020. Interest expenses remained generally low, although there was a significant increase in 2022 after a minimal cost year in 2020. The interest coverage ratio remained very high throughout, demonstrating the company’s strong earnings relative to interest costs, despite sharp fluctuations related primarily to changes in interest expense levels.

Earnings before fixed charges and tax

The earnings before fixed charges and tax exhibited a fluctuating but overall increasing trend over the five-year period. Starting at 183,077 thousand US$ in 2018, it rose to 237,127 thousand US$ in 2019, followed by a decline to 197,255 thousand US$ in 2020. Subsequently, the figure experienced a notable increase in 2021 to 267,862 thousand US$, culminating in a substantial rise to 404,414 thousand US$ in 2022. This pattern indicates strong recovery and growth particularly in the latest years.

Fixed charges

Fixed charges steadily increased over the analyzed period. Beginning at 8,366 thousand US$ in 2018, these charges rose incrementally each year to reach 14,836 thousand US$ in 2022. The growth in fixed charges suggests a rising burden of fixed financial obligations or interest expenses, albeit at a relatively moderate pace compared to earnings growth.

Fixed charge coverage ratio

The fixed charge coverage ratio, representing the company’s ability to meet fixed charges from earnings, showed consistent strength and general improvement. It was 21.88 in 2018 and slightly declined to 21.48 in 2019, followed by a more marked decrease to 17.43 in 2020, potentially reflecting the dip in earnings that year. Recovery occurred in 2021 with the ratio increasing to 22.51, and further improvement was seen in 2022, reaching 27.26. This upward trend in coverage ratio in the last two years suggests enhanced financial flexibility and improved capacity to cover fixed charges from earnings.