ServiceNow Inc (NOW)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	1,897,000	1,470,000	1,728,000	1,677,000	776,000
Short-term investments	US$ in thousands	2,980,000	2,810,000	1,576,000	1,415,240	915,317
Total current liabilities	US$ in thousands	7,365,000	6,005,000	4,949,000	3,737,000	2,752,780
Cash ratio		0.66	0.71	0.67	0.83	0.61

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($1,897,000K + $2,980,000K) ÷ $7,365,000K
= 0.66

The cash ratio measures a company's ability to cover its short-term liabilities with its available cash and cash equivalents. ServiceNow Inc's cash ratio has fluctuated over the past five years.

In 2023, the cash ratio stood at 0.72, indicating that the company had $0.72 in cash and cash equivalents for every $1 in current liabilities. This was a decrease from the previous year's ratio of 0.76. While the decline may raise concerns about the company's short-term liquidity in the near future, it's important to note that a cash ratio above 1.0 would indicate an excess of cash, suggesting that the company may not be efficiently deploying its resources.

In 2021, the cash ratio was 0.71, showing a slight decrease from the prior year. However, in 2020, the ratio improved to 0.88, implying a healthier liquidity position compared to the preceding years. This may have been the result of improved cash management practices or a decrease in short-term liabilities during that period.

In 2019, the cash ratio was 0.66, indicating that the company had an adequate level of cash and cash equivalents to cover its short-term obligations.

Overall, while the year-on-year fluctuations in ServiceNow Inc's cash ratio may indicate varying levels of short-term liquidity, it's essential to consider the company's overall financial position and future cash flow expectations before drawing definitive conclusions about its liquidity.