ServiceNow Inc (NOW)
Debt-to-capital ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Long-term debt | US$ in thousands | 1,488,000 | 1,486,000 | 1,484,000 | 1,640,000 | 694,981 |
| Total stockholders’ equity | US$ in thousands | 7,628,000 | 5,032,000 | 3,695,000 | 2,834,000 | 2,127,000 |
| Debt-to-capital ratio | 0.16 | 0.23 | 0.29 | 0.37 | 0.25 |
December 31, 2023 calculation
Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $1,488,000K ÷ ($1,488,000K + $7,628,000K)
= 0.16
The debt-to-capital ratio measures the proportion of a company's capital structure that is funded by debt. ServiceNow Inc's debt-to-capital ratio has shown a declining trend over the past five years, decreasing from 0.25 in 2019 to 0.16 in 2023. This indicates a decreasing reliance on debt in funding the company's operations and investments.
The lower debt-to-capital ratio suggests that ServiceNow Inc has been utilizing a greater proportion of equity in its capital structure, which can be seen as a positive sign by potential investors and creditors. It may also reflect the company's ability to generate sufficient internal funds to finance its activities without relying heavily on external debt.
The declining trend of the debt-to-capital ratio could indicate improved financial stability and reduced financial risk for ServiceNow Inc. However, it's essential to analyze the company's overall financial health in conjunction with other key performance indicators and industry benchmarks to gain a comprehensive understanding of its financial strength and future prospects.
Peer comparison
Dec 31, 2023