ServiceNow Inc. (NYSE:NOW)

The liquidity position, as indicated by the observed ratios, exhibits a generally stable but subtly declining trend over the analyzed period. While all three ratios – current, quick, and cash – remain above one for much of the period, suggesting sufficient short-term asset coverage of short-term liabilities, a gradual decrease is apparent, particularly in the latter half of the observation window.

Current Ratio

The current ratio demonstrates relative stability in the earlier part of the period, fluctuating between 1.11 and 1.24. A slight downward trend emerges from December 2022, with values decreasing from 1.11 to 1.00 by December 2025. The most recent quarters show a stabilization around the 1.10-1.13 range before the final decrease. This suggests a potentially diminishing capacity to cover short-term obligations with all current assets.

Quick Ratio

The quick ratio follows a similar pattern to the current ratio, beginning around 1.06 and exhibiting a gradual decline. The ratio decreased from 1.06 in March 2022 to 0.91 in December 2025. This indicates a consistent, albeit moderate, reduction in the ability to meet short-term liabilities using only the most liquid assets. The quick ratio remains above 1.0 for the majority of the period, but the trend warrants monitoring.

Cash Ratio

The cash ratio displays the most pronounced downward trend of the three ratios. Starting at 0.83, it steadily decreases to 0.60 by December 2025. This signifies a decreasing proportion of current liabilities covered by cash and cash equivalents. While still representing a substantial portion of immediate coverage, the decline suggests a potential reliance on other current assets to meet short-term obligations. The ratio dips below 0.70 in the later quarters, indicating a more pronounced reduction in immediate solvency.

Overall, the observed trends suggest a gradual erosion of the liquidity position. While the ratios generally remain at acceptable levels, the consistent downward movement across all three measures indicates a potential need for attention to working capital management and liquidity planning. The more significant decline in the cash ratio suggests a shift in the composition of current assets, with a decreasing reliance on the most liquid forms.

The current ratio exhibited a generally stable, though slightly declining, pattern over the observed period. Initial values fluctuated around 1.12 before demonstrating some improvement, followed by a gradual decrease towards the end of the period.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The current ratio began at 1.12 and remained at that level for the first two quarters. An increase to 1.24 was observed in the third quarter of 2022, before decreasing to 1.11 by the end of the year. This suggests a brief period of improved short-term liquidity followed by a return to previous levels.

2023 Performance

Throughout 2023, the current ratio remained relatively stable, fluctuating between 1.08 and 1.17. The ratio started at 1.17 and experienced a slight decline throughout the year, ending at 1.09. This indicates consistent, but modestly decreasing, ability to cover short-term liabilities with short-term assets.

Recent Trend (2024 – Mar 31, 2025)

The current ratio showed a slight increase in the first half of 2024, reaching 1.12. However, a more pronounced downward trend became apparent in the latter half of 2024 and continued into the first quarter of 2025, culminating in a ratio of 1.00. This represents the lowest point in the observed period and suggests a weakening in the company’s short-term liquidity position.

Overall Observations

The current ratio generally remained above 1.0 throughout the majority of the period, indicating that the entity possesses more current assets than current liabilities. However, the recent decline warrants monitoring, as a ratio approaching 1.0 may signal potential challenges in meeting short-term obligations. The decrease in the ratio is consistent with increases in both current assets and current liabilities, but the liabilities have grown at a faster rate.

The quick ratio for the analyzed period demonstrates a generally stable, though slightly declining, trend. Initially, the ratio remained consistent for three quarters before exhibiting fluctuations. A review of the underlying components – total quick assets and current liabilities – reveals the drivers behind these movements.

Overall Trend

The quick ratio began at 1.06 in the first quarter and fluctuated between approximately 0.91 and 1.17 over the observed timeframe. While generally above 1.0, indicating sufficient liquid assets to cover immediate liabilities, a subtle downward trend is apparent in the latter half of the period.

Initial Stability (Q1 2022 - Q3 2022)

From March 31, 2022, to September 30, 2022, the quick ratio remained relatively stable, oscillating between 1.06 and 1.17. This period suggests a balanced relationship between liquid assets and short-term obligations. Total quick assets experienced a modest increase during this time, while current liabilities decreased, contributing to the slight improvement in the ratio.

Fluctuations and Recent Decline (Q4 2022 - Q4 2025)

Beginning in December 2022, the quick ratio experienced more noticeable fluctuations. It decreased to 1.00 by September 2023, before a temporary increase to 1.05. However, the ratio then exhibited a consistent decline, reaching 0.91 by December 2025. This recent decline coincides with a more substantial increase in current liabilities compared to the growth in total quick assets.

Asset and Liability Dynamics

Total quick assets generally increased over the period, from US$5,160 million to US$9,501 million. However, current liabilities also increased, from US$4,852 million to US$10,443 million. The faster rate of growth in current liabilities, particularly in the most recent quarters, is the primary driver of the observed decline in the quick ratio.

The observed trend suggests a potential weakening in the company’s short-term liquidity position. While the ratio remains above 1.0 for most of the period, the recent decline warrants monitoring. Further investigation into the composition of both quick assets and current liabilities is recommended to understand the underlying causes and potential implications.

The cash ratio for the analyzed period demonstrates fluctuations, generally exhibiting a moderate level of short-term liquidity. Initial values indicate a relatively strong ability to cover immediate liabilities with available cash, but this position has experienced periods of decline, particularly towards the end of the observed timeframe.

Overall Trend

The cash ratio generally decreased over the analyzed period. Starting around 0.83 in the first quarter of 2022, it fluctuated before trending downwards to 0.60 by the final quarter of 2025. While there were periods of improvement, the overall trajectory suggests a diminishing capacity to meet short-term obligations solely with cash and cash equivalents.

Initial Period (Q1 2022 - Q4 2022)

The cash ratio began at 0.83 and remained relatively stable through the first three quarters of 2022, fluctuating between 0.81 and 0.89. A noticeable decrease occurred in the fourth quarter of 2022, falling to 0.71. This decline coincided with an increase in current liabilities, suggesting a potential strain on immediate liquidity.

Mid-Period (Q1 2023 - Q4 2023)

The ratio experienced a slight recovery in the first quarter of 2023, reaching 0.85, but quickly reverted to levels similar to those observed in late 2022. The ratio continued to decline through the end of 2023, reaching a low of 0.66 in the fourth quarter. This period demonstrates a consistent pressure on the company’s ability to cover current liabilities with cash.

Recent Period (Q1 2024 - Q4 2025)

The cash ratio exhibited continued volatility, with a slight increase to 0.78 in Q3 2024, followed by a decline to 0.69 in Q4 2024. The final quarter of 2025 saw the lowest ratio of the analyzed period at 0.60. This represents a significant decrease from the initial values and indicates a weakening short-term liquidity position. The increase in current liabilities appears to be outpacing the growth in total cash assets during this period.

The observed trend warrants further investigation into the underlying factors driving the changes in both cash assets and current liabilities. A sustained decline in the cash ratio could potentially indicate increasing liquidity risk.