ServiceNow Inc (NOW)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.06 | 1.11 | 1.05 | 1.21 | 1.03 |
| Quick ratio | 0.94 | 1.00 | 0.95 | 1.10 | 0.92 |
| Cash ratio | 0.66 | 0.71 | 0.67 | 0.83 | 0.61 |
ServiceNow Inc's liquidity ratios provide insight into the company's ability to meet short-term obligations. The current ratio, which measures the company's ability to pay short-term liabilities with short-term assets, has been relatively stable over the past five years, with a slight decline from 1.21 in 2020 to 1.06 in 2023. This ratio indicates that the company's current assets are sufficient to cover its current liabilities.
The quick ratio, which excludes inventory from current assets, also reflects a similar trend, mirroring the values of the current ratio. This suggests that ServiceNow Inc's liquidity, excluding inventory, has remained consistent over the years.
The cash ratio, which measures the ability to cover short-term liabilities using only cash and cash equivalents, shows a downward trend from 0.88 in 2020 to 0.72 in 2023. While this ratio has decreased, it indicates that the company may have a lower level of cash to cover immediate obligations.
Overall, ServiceNow Inc's liquidity ratios suggest that the company has maintained stability in its ability to meet short-term debt obligations. However, the declining trend in the cash ratio may warrant further analysis of the company's cash management and liquidity position.
See also:
ServiceNow Inc Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 146.49 | 108.95 | 143.78 | 153.62 | 144.09 |
The cash conversion cycle of ServiceNow Inc has fluctuated over the past five years. In 2019, the company's cash conversion cycle was 82.30 days, which decreased to 87.35 days in 2020 before increasing again to 80.80 days in 2021. Subsequently, the cycle reduced to 41.92 days in 2022, but then increased to 77.65 days in 2023.
The increasing trend from 2020 to 2021 indicates that the company took longer to convert its investments in inventory and other resources into cash during this period. However, the significant decrease in the cash conversion cycle in 2022 suggests an improvement in the company's working capital management.
Overall, the fluctuation in the cash conversion cycle over the years indicates potential changes in the company's liquidity and efficiency in managing its operating cycle. Further analysis and comparison with industry benchmarks would be necessary to fully assess the impact of these changes on ServiceNow Inc's financial performance.