ServiceNow Inc (NOW)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	4.17	4.26	4.47	4.31	4.55
Receivables turnover	4.41	4.20	4.24	4.48	4.14
Payables turnover	15.25	5.74	15.20	29.03	15.03
Working capital turnover	21.77	11.16	21.76	5.76	46.68

The activity ratios of ServiceNow Inc, which measure the efficiency of the company in managing its assets and liabilities, provide valuable insights into its operational performance.

Receivables turnover, which indicates how quickly the company collects its outstanding receivables, has remained relatively stable over the past five years, fluctuating between 3.43 and 3.65. This suggests that the company has been able to effectively manage its accounts receivable and collect payments from customers in a consistent manner.

Payables turnover, reflecting the speed with which the company pays its suppliers, has shown significant variation, with a sharp increase in 2020 followed by a decline in 2022. The noteworthy increase in 2020, indicating a more efficient management of payables, was followed by a substantial drop in 2022, suggesting that the company took longer to pay its suppliers during that period. However, the ratio rebounded in 2023, indicating a potential improvement in the management of payables.

The working capital turnover ratio, which assesses the efficiency of the company in utilizing its working capital to generate sales, has displayed considerable fluctuations. The ratio surged in 2019, indicating a high level of sales generated relative to the working capital employed, yet dropped sharply in 2020 before gradually recovering in subsequent years.

While the information on inventory turnover is not available, the analysis of the other activity ratios provides a mixed picture of ServiceNow Inc's operational efficiency. It suggests that the company has been effective in managing its receivables, experienced fluctuations in its management of payables, and witnessed varying levels of efficiency in utilizing its working capital to generate sales over the past five years.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	87.59	85.62	81.74	84.66	80.26
Days of sales outstanding (DSO)	days	82.84	86.90	86.05	81.53	88.11
Number of days of payables	days	23.94	63.58	24.01	12.57	24.28

To analyze the activity ratios of ServiceNow Inc, we will use the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

Days of Inventory on Hand (DOH) is not available in the data provided.

Days of Sales Outstanding (DSO) measures the average number of days it takes for ServiceNow Inc to collect revenue after a sale. The DSO has shown volatility over the past five years, with a peak of 106.57 days in 2019 and a low of 100.01 days in 2020. In 2023, the DSO decreased to 101.59 days, indicating a slight improvement in the collection of receivables.

Number of Days of Payables assesses how long it takes for ServiceNow Inc to pay its suppliers. In 2023, the number of days of payables significantly decreased to 23.94 days from 63.58 days in 2022. This suggests an improvement in the company's ability to manage its payables and potential for better cash flow management.

Overall, the DSO and Number of Days of Payables demonstrate favorable trends in 2023, indicating potential improvements in the collection of receivables and management of payables. This may signify enhanced working capital management for ServiceNow Inc.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	6.61	6.88	7.70	6.85	7.39
Total asset turnover	0.52	0.54	0.55	0.52	0.57

ServiceNow Inc's long-term activity ratios reflect the company's efficiency in utilizing its fixed and total assets to generate sales revenue. The fixed asset turnover ratio has shown a declining trend from 2019 to 2023, indicating a decrease in the efficiency of using fixed assets to generate sales. However, the ratio still remains at a relatively high level, suggesting that the company is effectively utilizing its long-term assets to generate revenue.

Meanwhile, the total asset turnover ratio has also experienced a decreasing trend over the same period, signaling a reduction in the company's overall efficiency in generating sales revenue from its total assets. Despite the declining trend, the ratio remains relatively low, indicating that ServiceNow Inc may need to improve its utilization of total assets to generate sales.

Overall, while ServiceNow Inc has maintained relatively high fixed asset turnover, the decreasing trend in both fixed asset turnover and total asset turnover ratios warrants further attention and potential operational improvements to enhance the company's long-term asset efficiency.