ServiceNow Inc (NOW)

Liquidity ratios

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
Current ratio 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 1.03 1.05 1.10 1.13
Quick ratio 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 0.92 0.92 0.97 0.99
Cash ratio 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 0.61 0.67 0.74 0.79

The liquidity ratios of ServiceNow Inc provide insight into the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has hovered around 1.1 over the past year, indicating a relatively stable position in the short term. Similarly, the quick ratio, which excludes inventory from current assets, has displayed consistency in line with the current ratio.

The cash ratio, which specifically assesses the company's ability to cover its current liabilities with its cash and cash equivalents, has shown a decline from 0.91 in March 2023 to 0.72 in December 2023. This suggests potential difficulties in meeting short-term obligations solely with cash reserves.

Overall, while the current and quick ratios reflect a relatively stable liquidity position for ServiceNow Inc, the decreasing trend in the cash ratio indicates a potential need for the company to closely monitor its cash management in order to meet its short-term obligations.

See also:

ServiceNow Inc Liquidity Ratios (Quarterly Data)

Additional liquidity measure

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
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

The cash conversion cycle of ServiceNow Inc, a measure of how efficiently the company is managing its working capital, has shown fluctuations over the past eight quarters.

In the most recent quarter, ending December 31, 2023, the cash conversion cycle increased to 77.65 days. This represents a significant increase from the previous quarter's figure of 54.43 days, indicating that the company took longer to convert its resources into cash during this period.

Looking back to the quarters prior, the trend shows increasing efficiency in managing working capital, as the cash conversion cycle decreased from 41.92 days in the fourth quarter of 2022 to 18.34 days in the third quarter of 2022, and even reached a negative value in the second quarter of 2022. This suggests that the company was able to more quickly convert its inventories into sales and then into cash during these quarters.

However, the negative cycle in the second quarter of 2022 may have been an anomaly or result of specific circumstances. It is important for stakeholders to assess the reasons behind such extreme fluctuations and whether they are tied to the company's operational or financial management.

Overall, the trend in the cash conversion cycle for ServiceNow Inc indicates the variability in the company's ability to efficiently manage its working capital and convert its resources into cash, highlighting the importance of closely monitoring changes in working capital management.