ServiceNow Inc (NOW)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	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
Inventory turnover	—	—	—	—	4.17	4.36	4.30	4.19	4.26	—	—	—	4.46	4.69	4.55	4.41	4.31	4.53	4.52	4.55
Receivables turnover	4.90	8.00	6.56	7.26	4.41	7.26	7.33	6.87	4.20	7.70	7.74	7.59	4.24	7.13	6.62	7.49	4.48	6.69	6.26	6.04
Payables turnover	33.63	13.16	7.04	8.98	15.25	26.38	10.08	7.20	5.74	7.86	5.59	8.57	15.19	19.64	11.83	9.75	29.03	17.86	10.12	11.27
Working capital turnover	13.25	11.50	11.73	27.96	21.77	19.04	9.59	7.83	11.16	6.63	11.21	10.61	21.75	11.15	16.31	5.62	5.76	3.73	8.10	43.83

ServiceNow Inc's activity ratios provide insight into how efficiently the company is managing its assets and operations. Let's analyze the key activity ratios based on the provided data:

1. Inventory Turnover: ServiceNow's inventory turnover has remained relatively consistent around the range of 4.00 to 4.70 over the years. A higher inventory turnover ratio signifies that the company is selling its inventory quickly, which is generally favorable as it reduces the risk of obsolete inventory.

2. Receivables Turnover: The receivables turnover ratio indicates how quickly the company collects payment from its customers. ServiceNow's receivables turnover improved from 2020 to 2021 but fluctuated afterward. A higher turnover ratio suggests that the company is efficient in collecting outstanding amounts from its customers.

3. Payables Turnover: The payables turnover ratio illustrates how quickly the company pays its suppliers. ServiceNow's payables turnover ratio decreased significantly in 2021 and experienced volatility in subsequent years. A lower payables turnover ratio may indicate a longer time taken to pay suppliers, which could impact relationships with vendors.

4. Working Capital Turnover: This ratio evaluates how efficiently the company utilizes its working capital to generate sales. ServiceNow's working capital turnover has varied over the years, indicating fluctuations in working capital efficiency. A higher turnover ratio suggests that the company is effectively utilizing its working capital to generate revenue.

In summary, ServiceNow's activity ratios highlight its performance in managing inventory, accounts receivable, accounts payable, and working capital. Monitoring these ratios can help identify operational efficiency and liquidity trends within the company.

Average number of days

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	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
Days of inventory on hand (DOH)	days	—	—	—	—	87.59	83.63	84.90	87.14	85.62	—	—	—	81.80	77.82	80.31	82.75	84.66	80.54	80.72	80.14
Days of sales outstanding (DSO)	days	74.44	45.62	55.66	50.29	82.84	50.31	49.76	53.13	86.90	47.37	47.17	48.07	86.06	51.21	55.13	48.71	81.53	54.58	58.34	60.41
Number of days of payables	days	10.85	27.73	51.84	40.64	23.94	13.84	36.20	50.68	63.58	46.46	65.27	42.61	24.03	18.58	30.86	37.43	12.57	20.44	36.08	32.39

Based on the provided data, ServiceNow Inc's activity ratios indicate the efficiency of its inventory management, accounts receivable collection, and accounts payable turnover.

1. Days of Inventory on Hand (DOH):
- ServiceNow Inc's DOH ranged from approximately 77 to 88 days over the reported periods.
- The company maintained an average inventory level for about 80 days during the most recent periods, suggesting a stable inventory management process.
- A slight increase in DOH towards the end of the period (December 31, 2023 - 87.59 days) might indicate a potential slowdown in inventory turnover, which requires monitoring.

2. Days of Sales Outstanding (DSO):
- The DSO for ServiceNow Inc varied from around 45 to 86 days across the analyzed quarters.
- The company collected outstanding receivables within an average of about 55 days during the latest periods, showcasing effective accounts receivable management.
- There was a spike in DSO on December 31, 2021, and December 31, 2022, indicating delays in customer payments that might impact cash flows and liquidity.

3. Number of Days of Payables:
- ServiceNow Inc's payable days ranged from 11 to 65 days throughout the evaluated time frames.
- The company took an average of about 30 days to pay its suppliers, with fluctuations in payables observed in different quarters.
- A significant decrease in payable days in December 31, 2024 (10.85 days) suggests a potential improvement in liquidity but should be evaluated to ensure sustainable vendor relationships.

Overall, ServiceNow Inc's activity ratios reveal stable inventory management, efficient accounts receivable collection, and varying patterns in accounts payable turnover, requiring continuous monitoring to maintain optimal working capital management and cash flows.

Long-term

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	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
Fixed asset turnover	6.23	6.09	6.20	6.54	6.61	7.07	6.98	6.82	6.88	7.57	7.53	7.84	7.70	7.47	7.06	6.97	6.85	7.48	7.23	7.89
Total asset turnover	0.54	0.57	0.55	0.54	0.52	0.56	0.54	0.56	0.54	0.62	0.59	0.57	0.55	0.58	0.56	0.55	0.52	0.55	0.61	0.60

ServiceNow Inc's fixed asset turnover ratio has shown some fluctuations over the years, ranging from a high of 7.89 in March 2020 to a low of 6.09 in September 2024. This ratio indicates the efficiency of the company in generating sales revenue from its fixed assets. Despite the fluctuations, the company generally maintained a relatively high fixed asset turnover ratio, suggesting effective utilization of its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio, which measures the efficiency of the company in utilizing all its assets to generate sales, also displayed variations, with a range from 0.52 in December 2020 to 0.62 in September 2022. The total asset turnover ratio remained relatively stable over the years, indicating the company's ability to efficiently generate revenue from its total asset base.

Overall, the trends in both fixed asset turnover and total asset turnover ratios reflect ServiceNow Inc's ability to effectively utilize its assets to generate sales revenue, showcasing a generally efficient asset management strategy.