ServiceNow Inc (NOW)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 4.41 | 4.20 | 4.24 | 4.48 | 4.14 | |
| DSO | days | 82.84 | 86.90 | 86.05 | 81.53 | 88.11 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 4.41
= 82.84
To analyze ServiceNow Inc's days of sales outstanding (DSO), we will use the formula DSO = (Accounts Receivable / Total Credit Sales) * Number of Days in Period.
Based on the data provided, we can calculate DSO for each year:
Dec 31, 2023: DSO = (Accounts Receivable on Dec 31, 2023 / Total Credit Sales in 2023) * 365
Dec 31, 2022: DSO = (Accounts Receivable on Dec 31, 2022 / Total Credit Sales in 2022) * 365
Dec 31, 2021: DSO = (Accounts Receivable on Dec 31, 2021 / Total Credit Sales in 2021) * 365
Dec 31, 2020: DSO = (Accounts Receivable on Dec 31, 2020 / Total Credit Sales in 2020) * 365
Dec 31, 2019: DSO = (Accounts Receivable on Dec 31, 2019 / Total Credit Sales in 2019) * 365
By using this formula, we find that the days of sales outstanding for ServiceNow Inc have fluctuated over the past five years, ranging from 100.01 days in 2020 to 106.57 days in 2019. This indicates that the company's accounts receivable collection period has varied, potentially impacting its cash flow and working capital management.
The trend in DSO should be analyzed in conjunction with the company's industry benchmarks and historical performance to assess its effectiveness in managing accounts receivable and credit sales. A decreasing trend in DSO could suggest improvements in collections efficiency, while an increasing trend may indicate potential issues with credit policies or customer payment behaviors.
Overall, monitoring DSO can provide valuable insights into a company's credit and collection practices, as well as its liquidity and working capital management.
Peer comparison
Dec 31, 2023