ServiceNow Inc (NOW)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | 4.26 | 4.47 | 4.31 |
| Receivables turnover | 4.90 | 4.41 | 4.20 | 4.24 | 4.48 |
| Payables turnover | 33.63 | 15.25 | 5.74 | 15.20 | 29.03 |
| Working capital turnover | 13.25 | 21.77 | 11.16 | 21.76 | 5.76 |
Based on the provided activity ratios data for ServiceNow Inc, the following analysis can be made:
1. Inventory Turnover: The company's inventory turnover ratio has been relatively stable over the years, ranging from 4.26 to 4.47. This indicates that ServiceNow is efficient in managing its inventory and converting it into sales.
2. Receivables Turnover: ServiceNow's receivables turnover ratio has shown a slight increase from 4.24 in 2021 to 4.90 in 2024. This suggests that the company is collecting its receivables more quickly over the years, which is a positive sign for its financial health.
3. Payables Turnover: The payables turnover ratio for ServiceNow has fluctuated significantly over the years, from 5.74 in 2022 to 33.63 in 2024. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, which could potentially strain supplier relationships but also reflect better cash management.
4. Working Capital Turnover: The working capital turnover ratio for ServiceNow has varied, with the highest value of 21.77 in 2023. This ratio measures the efficiency of the company in utilizing its working capital to generate sales. A higher ratio indicates efficient use of working capital.
Overall, analyzing these activity ratios provides insights into how efficiently ServiceNow is managing its inventory, receivables, payables, and working capital to drive its operational performance and financial health.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 85.62 | 81.74 | 84.66 |
| Days of sales outstanding (DSO) | days | 74.44 | 82.84 | 86.90 | 86.05 | 81.53 |
| Number of days of payables | days | 10.85 | 23.94 | 63.58 | 24.01 | 12.57 |
ServiceNow Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in the DOH ratio indicates the number of days it takes for the company to sell its inventory.
- In 2020, the company held inventory for approximately 84.66 days, which decreased slightly to 81.74 days in 2021, before increasing to 85.62 days in 2022.
- However, data for 2023 and 2024 is missing, making it difficult to assess the recent trend in inventory turnover.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for the company to collect its accounts receivable.
- The DSO increased from 81.53 days in 2020 to 86.05 days in 2021, and further to 86.90 days in 2022.
- However, the ratio improved in 2023 to 82.84 days, and significantly decreased to 74.44 days in 2024, indicating a more efficient collection process.
3. Number of Days of Payables:
- This metric shows how long it takes the company to pay its suppliers.
- The number of days of payables was 12.57 days in 2020, increased to 24.01 days in 2021, and then spiked to 63.58 days in 2022.
- However, the metric improved in 2023 to 23.94 days and significantly decreased to 10.85 days in 2024, suggesting the company has been managing its payables more effectively.
Overall, the analysis of these activity ratios suggests that ServiceNow Inc may have improved its efficiency in collecting receivables and paying suppliers, but data limitations for 2023 and 2024 require further observation to provide a complete assessment of the company's operational performance.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.23 | 6.61 | 6.88 | 7.70 | 6.85 |
| Total asset turnover | 0.54 | 0.52 | 0.54 | 0.55 | 0.52 |
ServiceNow Inc exhibited an improvement in its Fixed Asset Turnover ratio from 6.85 in 2020 to 7.70 in 2021, indicating the company effectively generated $7.70 in revenue for every $1 invested in fixed assets. However, this ratio slightly declined in the following years, reaching 6.23 in 2024.
In terms of Total Asset Turnover, the company's performance remained stable over the years, with ratios ranging between 0.52 and 0.55. This suggests that ServiceNow generated revenue equivalent to 52% to 55% of its total assets each year, showcasing consistent efficiency in utilizing its total assets to generate sales.
Overall, the company demonstrated strong operational efficiency in utilizing both fixed assets and total assets to generate revenue, although there was a slight decline in the Fixed Asset Turnover ratio towards the end of the period analyzed.