ServiceNow Inc (NOW)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.09 | 0.11 | 0.14 | 0.19 | 0.12 |
| Debt-to-capital ratio | 0.16 | 0.23 | 0.29 | 0.37 | 0.25 |
| Debt-to-equity ratio | 0.20 | 0.30 | 0.40 | 0.58 | 0.33 |
| Financial leverage ratio | 2.28 | 2.64 | 2.92 | 3.08 | 2.83 |
The solvency ratios of ServiceNow Inc indicate its ability to meet its long-term financial obligations. The debt-to-assets ratio, which measures the proportion of total assets financed by debt, has decreased from 0.19 in 2020 to 0.09 in 2023, reflecting a lower reliance on debt to finance its assets.
Similarly, the debt-to-capital ratio, which assesses the proportion of capital financed by debt, has shown a decreasing trend from 0.37 in 2020 to 0.16 in 2023, indicating a lower reliance on debt in the capital structure. This demonstrates an improvement in the company's solvency position.
Moreover, the debt-to-equity ratio has decreased from 0.58 in 2020 to 0.20 in 2023, signaling a reduction in financial risk and a stronger equity position compared to debt. Additionally, the financial leverage ratio, which measures the degree of financial leverage, has decreased from 3.07 in 2020 to 2.28 in 2023, signifying a decline in the financial risk borne by the company's equity holders.
Overall, the decreasing trends in these solvency ratios indicate an improved ability of ServiceNow Inc to meet its long-term financial obligations and a stronger financial position.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 30.48 | 15.78 | 9.89 | 5.55 | 3.03 |
The interest coverage ratio measures a company's ability to meet its interest payment obligations with its earnings. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payments.
From the provided data, we observe that:
1. The interest coverage ratio for Dec 31, 2023, and Dec 31, 2020 are not available (denoted by "—").
2. For Dec 31, 2022, the interest coverage ratio was 13.15, indicating that the company's earnings were 13.15 times its interest expense for that period. This suggests a strong ability to cover its interest obligations.
3. For Dec 31, 2021, the interest coverage ratio was 9.18, which is lower than the previous year but still indicates a relatively healthy ability to meet interest payments.
4. Similarly, for Dec 31, 2019, the interest coverage ratio is not available, thus making it challenging to assess the trend over the long term.
It is important to note the unavailability of data for 2020 and 2023, which limits the ability to derive a comprehensive trend analysis. Nonetheless, the available data indicates that the company has historically maintained a strong ability to cover its interest obligations, as evidenced by the ratios of 13.15 and 9.18 in the respective years.