ServiceNow Inc (NOW)

Cash conversion cycle

		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
Cash conversion cycle	days	63.58	58.90	108.95	143.78	153.62

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 74.44 – 10.85
= 63.58

The cash conversion cycle of ServiceNow Inc has shown a decreasing trend over the observed period. Starting at 153.62 days as of December 31, 2020, it has consistently decreased each year to 63.58 days as of December 31, 2024. This indicates that the company has been able to improve its efficiency in managing its cash flow from the beginning to the end of the cycle.

A lower cash conversion cycle suggests that ServiceNow Inc is taking less time to convert its investments in inventory and other resources into cash generated from sales. This could be attributed to better inventory management, enhanced accounts receivable collection processes, or more efficient accounts payable practices.

Overall, the declining trend in the cash conversion cycle for ServiceNow Inc is a positive sign as it indicates that the company is efficiently managing its working capital and liquidity, which can have a positive impact on its financial performance and overall operational efficiency.