ServiceNow Inc (NOW)
Liquidity 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.10 | 1.13 | 1.12 | 1.05 | 1.06 | 1.08 | 1.14 | 1.17 | 1.11 | 1.24 | 1.12 | 1.12 | 1.05 | 1.13 | 1.08 | 1.23 | 1.21 | 1.40 | 1.17 | 1.03 |
| Quick ratio | 0.96 | 0.97 | 0.97 | 0.91 | 0.94 | 0.93 | 1.01 | 1.05 | 1.00 | 1.10 | 0.99 | 1.00 | 0.95 | 1.00 | 0.96 | 1.12 | 1.10 | 1.26 | 1.04 | 0.91 |
| Cash ratio | 0.69 | 0.78 | 0.75 | 0.73 | 0.66 | 0.73 | 0.82 | 0.85 | 0.71 | 0.89 | 0.81 | 0.83 | 0.67 | 0.80 | 0.76 | 0.94 | 0.83 | 1.04 | 0.82 | 0.68 |
ServiceNow Inc's liquidity ratios have shown some fluctuations over the past few years.
The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has generally been above 1, indicating that ServiceNow has had sufficient current assets to meet its current liabilities. The ratio peaked at 1.40 in September 2020, suggesting strong liquidity at that time. However, it dipped to 1.05 by December 2021 before gradually increasing again to 1.10 by December 2024.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also varied over the years. The ratio has mostly been above 1, indicating that ServiceNow could meet its short-term obligations without relying on inventory. However, it experienced some declines, falling to as low as 0.93 in September 2023 before recovering to 0.96 by December 2024.
The cash ratio, which focuses solely on the company's ability to pay off its current liabilities with cash and cash equivalents, has generally been below 1. This suggests that ServiceNow may need to rely on other current assets to meet its short-term obligations. The ratio fluctuated over the years, reaching a peak of 1.04 in September 2020 and declining to 0.66 by December 2023, before rising slightly to 0.69 by December 2024.
Overall, while ServiceNow Inc has maintained current ratios above 1, indicating a healthy liquidity position, fluctuations in the quick ratio and cash ratio suggest some variability in the company's ability to meet its short-term obligations with more stringent measures of liquidity.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 63.58 | 17.90 | 3.81 | 9.66 | 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 |
The cash conversion cycle of ServiceNow Inc has fluctuated over the periods analyzed, reflecting changes in the company's efficiency in managing its working capital. The cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales.
During the period from March 31, 2020, to December 31, 2020, the company experienced an increase in its cash conversion cycle, peaking at 153.62 days by the end of December 2020. This prolonged cycle may indicate challenges in managing inventory levels or accounts receivable collections efficiently during that period.
However, there was a significant improvement in the cash conversion cycle starting from March 31, 2021, with a sharp decrease to 94.04 days. This improvement continued through the first half of 2021, stabilizing around 100 days until December 31, 2021, when it increased again to 143.84 days.
The company then experienced a dramatic improvement in the cash conversion cycle in the first half of 2022, with negative values indicating an efficient conversion of investments into cash flows. This trend continued in the subsequent periods, with the cycle remaining at relatively low levels through September 30, 2024.
Overall, the fluctuations in the cash conversion cycle of ServiceNow Inc suggest varying levels of operational efficiency and working capital management. The company appears to have made notable improvements in its cash conversion cycle in recent periods, indicating enhanced effectiveness in converting investments into cash. However, continued monitoring of this metric is important to ensure sustained efficiency in working capital management.