Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
ServiceNow Inc., liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.10 | 1.06 | 1.11 | 1.05 | 1.21 | |
| Quick ratio | 1.02 | 1.00 | 1.06 | 1.01 | 1.16 | |
| Cash ratio | 0.69 | 0.66 | 0.71 | 0.67 | 0.83 |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Current Ratio
- The current ratio shows a fluctuating but relatively stable trend over the five-year period. It started at 1.21 in 2020, declined to 1.05 in 2021, then rose slightly to 1.11 in 2022. Following this, it decreased again to 1.06 in 2023 before experiencing a modest increase to 1.10 in 2024. Overall, the ratio remains close to 1, suggesting the company has maintained a consistent ability to cover its short-term liabilities with its short-term assets, albeit with slight variations year over year.
- Quick Ratio
- The quick ratio mirrors the general trend observed in the current ratio but at slightly lower values. It decreased from 1.16 in 2020 to 1.01 in 2021, indicating a reduction in the company's most liquid assets relative to current liabilities during that time. It then improved to 1.06 in 2022 but declined again in 2023 to exactly 1.00, before marginally rising to 1.02 in 2024. This pattern may reflect occasional tightening in liquidity excluding inventory, but overall the company maintains near parity between liquid assets and current liabilities.
- Cash Ratio
- The cash ratio presents a noticeable decline from 0.83 in 2020 to 0.67 in 2021, signifying a lower proportion of cash and cash equivalents to current liabilities. A slight recovery to 0.71 occurred in 2022, but the ratio decreased again to 0.66 in 2023, followed by a small increase to 0.69 in 2024. This indicates that the company's most conservative liquidity measure, cash on hand relative to current liabilities, has generally weakened over the period, with minor fluctuations suggesting ongoing management of cash reserves.
Current Ratio
ServiceNow Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 9,187) | 7,777) | 6,654) | 5,220) | 4,522) | |
| Current liabilities | 8,358) | 7,365) | 6,005) | 4,949) | 3,737) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.10 | 1.06 | 1.11 | 1.05 | 1.21 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Accenture PLC | 1.10 | 1.30 | 1.23 | 1.25 | 1.40 | |
| Adobe Inc. | 1.07 | 1.34 | 1.11 | 1.25 | 1.48 | |
| Cadence Design Systems Inc. | 2.93 | 1.24 | 1.27 | 1.77 | 1.86 | |
| CrowdStrike Holdings Inc. | 1.76 | 1.73 | 1.83 | 2.65 | 2.38 | |
| Fair Isaac Corp. | 1.62 | 1.51 | 1.46 | 0.99 | 1.29 | |
| International Business Machines Corp. | 1.04 | 0.96 | 0.92 | 0.88 | 0.98 | |
| Intuit Inc. | 1.29 | 1.47 | 1.39 | 1.94 | 2.26 | |
| Microsoft Corp. | 1.27 | 1.77 | 1.78 | 2.08 | 2.52 | |
| Oracle Corp. | 0.72 | 0.91 | 1.62 | 2.30 | 3.03 | |
| Palantir Technologies Inc. | 5.96 | 5.55 | 5.17 | 4.34 | 3.74 | |
| Palo Alto Networks Inc. | 0.89 | 0.78 | 0.77 | 0.91 | 1.91 | |
| Salesforce Inc. | 1.09 | 1.02 | 1.05 | 1.23 | 1.08 | |
| Synopsys Inc. | 2.44 | 1.15 | 1.09 | 1.16 | 1.19 | |
| Workday Inc. | 1.97 | 1.75 | 1.03 | 1.12 | 1.04 | |
| Current Ratio, Sector | ||||||
| Software & Services | 1.19 | 1.39 | 1.43 | 1.67 | 1.91 | |
| Current Ratio, Industry | ||||||
| Information Technology | 1.24 | 1.41 | 1.37 | 1.55 | 1.71 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 9,187 ÷ 8,358 = 1.10
2 Click competitor name to see calculations.
- Current Assets
- Current assets have exhibited a consistent upward trend over the five-year period. Starting from US$4,522 million at the end of 2020, current assets increased steadily each year, reaching US$9,187 million by the end of 2024. This reflects a more than doubling of liquid and short-term assets, indicative of potentially improved liquidity or expansion of operational working capital.
- Current Liabilities
- Current liabilities have also grown significantly during the same timeframe. From US$3,737 million in 2020, these liabilities rose each year, culminating in US$8,358 million at the end of 2024. The consistent increase in short-term obligations suggests that the company’s operational or financing activities have required greater short-term funding or obligations have increased in correspondence with business growth.
- Current Ratio
- The current ratio, which measures short-term liquidity by comparing current assets to current liabilities, has fluctuated slightly but remained near the value of 1.1 over the period. Initially at 1.21 in 2020, it declined to 1.05 in 2021, then modestly recovered to 1.11 in 2022, followed by a mild decrease to 1.06 in 2023, and a slight increase again to 1.10 in 2024. These values indicate that the company generally maintained a narrow margin of current assets exceeding current liabilities, suggesting a stable but not excessive liquidity buffer.
- Overall Analysis
- The company’s working capital base has expanded significantly, with both current assets and current liabilities growing substantially. However, the current ratio remains relatively stable, hovering slightly above 1 throughout the period, which implies effective management of short-term financial obligations relative to available liquid assets. This stability suggests a consistent approach to balancing liquidity with operational financing needs, without taking on excessive short-term risk or underutilizing operational capacity.
Quick Ratio
ServiceNow Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 2,304) | 1,897) | 1,470) | 1,728) | 1,677) | |
| Short-term investments | 3,458) | 2,980) | 2,810) | 1,576) | 1,415) | |
| Accounts receivable, net | 2,240) | 2,036) | 1,725) | 1,390) | 1,009) | |
| Current portion of deferred commissions | 517) | 461) | 369) | 303) | 229) | |
| Total quick assets | 8,519) | 7,374) | 6,374) | 4,997) | 4,330) | |
| Current liabilities | 8,358) | 7,365) | 6,005) | 4,949) | 3,737) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 1.02 | 1.00 | 1.06 | 1.01 | 1.16 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Accenture PLC | 0.98 | 1.18 | 1.12 | 1.14 | 1.29 | |
| Adobe Inc. | 0.95 | 1.22 | 1.00 | 1.11 | 1.34 | |
| Cadence Design Systems Inc. | 2.53 | 1.02 | 1.02 | 1.47 | 1.60 | |
| CrowdStrike Holdings Inc. | 1.60 | 1.58 | 1.68 | 2.50 | 2.18 | |
| Fair Isaac Corp. | 1.52 | 1.43 | 1.37 | 0.91 | 1.19 | |
| International Business Machines Corp. | 0.90 | 0.82 | 0.76 | 0.69 | 0.83 | |
| Intuit Inc. | 0.71 | 1.25 | 1.17 | 1.65 | 2.04 | |
| Microsoft Corp. | 1.06 | 1.54 | 1.57 | 1.90 | 2.33 | |
| Oracle Corp. | 0.59 | 0.74 | 1.43 | 2.15 | 2.83 | |
| Palantir Technologies Inc. | 5.83 | 5.41 | 4.92 | 4.11 | 3.59 | |
| Palo Alto Networks Inc. | 0.82 | 0.72 | 0.75 | 0.88 | 1.85 | |
| Salesforce Inc. | 0.96 | 0.90 | 0.93 | 1.11 | 0.95 | |
| Synopsys Inc. | 1.88 | 0.85 | 0.85 | 0.89 | 0.94 | |
| Workday Inc. | 1.87 | 1.66 | 0.96 | 1.07 | 0.95 | |
| Quick Ratio, Sector | ||||||
| Software & Services | 1.00 | 1.21 | 1.26 | 1.51 | 1.75 | |
| Quick Ratio, Industry | ||||||
| Information Technology | 0.96 | 1.12 | 1.08 | 1.30 | 1.46 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 8,519 ÷ 8,358 = 1.02
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets exhibit a consistent upward trend over the five-year period, increasing from $4,330 million in 2020 to $8,519 million in 2024. This represents nearly a doubling of quick assets, indicating improved liquidity resources available to cover immediate liabilities.
- Current liabilities
- Current liabilities also show a steady increase from $3,737 million in 2020 to $8,358 million in 2024. The growth in liabilities is significant, nearly doubling over the same period, which suggests growing short-term obligations that must be managed carefully to maintain financial health.
- Quick ratio
- The quick ratio fluctuates between 1.00 and 1.16 across the five years. Starting at 1.16 in 2020, the ratio declines to 1.01 in 2021 and remains relatively stable around 1.00 to 1.06 thereafter, finishing at 1.02 in 2024. This stability near the equilibrium point of 1 suggests that while quick assets are consistently close to covering current liabilities, the margin of safety has slightly diminished compared to 2020.
Cash Ratio
ServiceNow Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 2,304) | 1,897) | 1,470) | 1,728) | 1,677) | |
| Short-term investments | 3,458) | 2,980) | 2,810) | 1,576) | 1,415) | |
| Total cash assets | 5,762) | 4,877) | 4,280) | 3,304) | 3,092) | |
| Current liabilities | 8,358) | 7,365) | 6,005) | 4,949) | 3,737) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.69 | 0.66 | 0.71 | 0.67 | 0.83 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Accenture PLC | 0.26 | 0.50 | 0.45 | 0.52 | 0.67 | |
| Adobe Inc. | 0.75 | 0.95 | 0.75 | 0.84 | 1.09 | |
| Cadence Design Systems Inc. | 2.03 | 0.72 | 0.66 | 1.13 | 1.17 | |
| CrowdStrike Holdings Inc. | 1.29 | 1.28 | 1.42 | 2.22 | 1.85 | |
| Fair Isaac Corp. | 0.40 | 0.37 | 0.40 | 0.35 | 0.38 | |
| International Business Machines Corp. | 0.45 | 0.39 | 0.28 | 0.22 | 0.36 | |
| Intuit Inc. | 0.54 | 0.97 | 0.90 | 1.46 | 2.00 | |
| Microsoft Corp. | 0.60 | 1.07 | 1.10 | 1.47 | 1.89 | |
| Oracle Corp. | 0.34 | 0.44 | 1.12 | 1.93 | 2.50 | |
| Palantir Technologies Inc. | 5.25 | 4.93 | 4.48 | 3.83 | 3.33 | |
| Palo Alto Networks Inc. | 0.34 | 0.31 | 0.44 | 0.57 | 1.39 | |
| Salesforce Inc. | 0.53 | 0.48 | 0.48 | 0.67 | 0.54 | |
| Synopsys Inc. | 1.53 | 0.53 | 0.56 | 0.65 | 0.58 | |
| Workday Inc. | 1.55 | 1.32 | 0.72 | 0.83 | 0.65 | |
| Cash Ratio, Sector | ||||||
| Software & Services | 0.58 | 0.78 | 0.82 | 1.11 | 1.32 | |
| Cash Ratio, Industry | ||||||
| Information Technology | 0.57 | 0.71 | 0.66 | 0.88 | 1.06 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 5,762 ÷ 8,358 = 0.69
2 Click competitor name to see calculations.
The financial data over the five-year period reveals meaningful trends across liquidity and short-term obligations.
- Total cash assets
- There is a consistent upward trajectory in total cash assets, growing from US$3,092 million in 2020 to US$5,762 million in 2024. This indicates a strengthening cash position, with cash holdings almost doubling within the period. The yearly increments demonstrate steady cash accumulation, supporting potential operational needs or investment opportunities.
- Current liabilities
- Current liabilities have risen substantially, increasing from US$3,737 million in 2020 to US$8,358 million in 2024. The increase is pronounced each year, reflecting growing short-term financial obligations possibly due to higher operational scale or financing activities. The liabilities more than doubled over the reported timeframe, suggesting increasing pressure on the company’s short-term resources.
- Cash ratio
- The cash ratio, representing cash assets relative to current liabilities, shows a declining trend overall, starting at 0.83 in 2020 and decreasing to a low of 0.66 in 2023 before a slight recovery to 0.69 in 2024. Despite rising cash balances, the faster increase in current liabilities has resulted in a weaker cash ratio. This signals a relatively reduced liquidity buffer to meet immediate liabilities purely with cash, highlighting a potential concern in short-term liquidity management.
In summary, while the company has steadily increased its total cash assets, the rate at which current liabilities have grown outweighs this cash accumulation, causing a downward pressure on the cash ratio. The moderate improvement in the cash ratio in the final year suggests some stabilization but it remains lower than the initial benchmark, implying the company may need to monitor its liquidity to maintain financial flexibility.