ServiceNow Inc (NOW)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
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	80.26	76.67	78.12	79.33
Days of sales outstanding (DSO)	days	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	88.11	61.07	61.01	54.92
Number of days of payables	days	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	24.28	29.99	33.76	21.21
Cash conversion cycle	days	146.49	120.10	98.46	89.58	108.95	0.91	-18.09	5.46	143.84	110.45	104.57	94.04	153.62	114.68	102.98	108.16	144.09	107.74	105.37	113.04

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 87.59 + 82.84 – 23.94
= 146.49

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally seen as a positive sign, as it indicates efficient management of working capital.

Looking at the data for ServiceNow Inc, we can see that the cash conversion cycle has fluctuated over the past eight quarters. In the most recent quarter ending December 31, 2023, the cash conversion cycle increased to 77.65 days, indicating a longer time to convert investments into cash flows compared to the previous quarter. This suggests a potential slowdown in the company's cash conversion efficiency.

The trend over the past two years shows a general improvement in cash conversion efficiency, with the cycle decreasing from 41.92 days in December 2022 to -0.20 days in June 2022, indicating a negative cycle that could be influenced by the company's management of payables, receivables, and inventory.

Overall, the trend in the cash conversion cycle for ServiceNow Inc shows some variability, with periods of improvement followed by a recent increase in the time it takes to convert investments into cash. Further analysis of the company's operational and financial management may provide insights into the factors driving these fluctuations.