ServiceNow Inc. (NYSE:NOW)

Debt ratios

There is a clear downward trend observed in all debt-related ratios over the five-year period. The debt to equity ratio steadily decreased from 0.58 in 2020 to 0.15 in 2024, indicating a reduction in reliance on debt relative to shareholders' equity. When including operating lease liabilities, this ratio also declined from 0.75 to 0.24, showing improved balance sheet strength even when lease obligations are considered.

Similarly, the debt to capital ratio fell from 0.37 in 2020 to 0.13 in 2024, while the adjusted ratio including operating lease liabilities declined from 0.43 to 0.19, reflecting a consistent lowering of the company's debt proportion within its capital structure.

Debt to assets ratios exhibit a comparable decreasing trend, with the standard ratio dropping from 0.19 to 0.07 and the adjusted figure decreasing from 0.24 to 0.11. This suggests that the company’s total assets increasingly rely less on debt financing over time.

Financial leverage

The financial leverage ratio decreased from 3.07 in 2020 to 2.12 in 2024, indicating a gradual decline in the extent to which the company uses borrowed funds to amplify returns on equity. This change aligns with the reductions noted in debt-related ratios and points to a more conservative capital structure.

Interest and fixed charge coverage

There is a prominent upward trend in both interest coverage and fixed charge coverage ratios, signaling significant improvements in the company's ability to meet its interest and fixed financial obligations from operating earnings. Interest coverage rose sharply from 5.56 times in 2020 to 76.57 times in 2024, reflecting markedly increased earnings relative to interest expense.

Fixed charge coverage also more than quintupled from 2.29 times to 12.36 times over the same period, suggesting enhanced capacity to cover fixed costs such as lease payments and interest expenses. This substantial improvement enhances financial stability and reduces credit risk.

Total Debt

The total debt remained relatively stable over the period from 2020 to 2024, showing a slight decreasing trend in the initial years. It decreased from 1640 million USD in 2020 to 1486 million USD in 2022 but then stabilized around 1488-1489 million USD in 2023 and 2024.

Stockholders’ Equity

There was a consistent and significant increase in stockholders’ equity throughout the period. The equity rose from 2834 million USD in 2020 to 9609 million USD in 2024, reflecting substantial growth, particularly notable between 2022 and 2024.

Debt to Equity Ratio

The debt to equity ratio demonstrated a marked decline during the period, decreasing from 0.58 in 2020 to 0.15 in 2024. This downward trend indicates a strengthening equity base relative to the company’s debt level, suggesting an improvement in financial leverage and balance sheet strength.

Summary

Overall, the financial data indicates that while total debt levels remained fairly constant, there was considerable growth in stockholders’ equity. The declining debt to equity ratio reflects a positive shift in the company’s capital structure, characterized by increased equity and relatively stable debt, potentially enhancing financial stability and reducing financial risk over the analyzed period.

The financial data reveals significant changes in the capital structure over the observed period, from December 31, 2020, to December 31, 2024.

Total Debt (including operating lease liability)

The total debt increased slightly from US$2,135 million in 2020 to US$2,278 million in 2024. The growth is modest and relatively stable, with a minor rise each year, peaking at US$2,284 million in 2023 before a slight decrease in 2024.

Stockholders’ Equity

Stockholders’ equity experienced substantial growth during the same period, increasing from US$2,834 million in 2020 to US$9,609 million in 2024. This shows a consistent upward trajectory with particularly strong increases from 2022 onwards, indicating enhanced retained earnings, capital contributions, or asset revaluations.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio demonstrates a marked decline, moving from 0.75 in 2020 down to 0.24 in 2024. This decline indicates a significant reduction in leverage relative to equity, reflecting improved financial stability and a stronger equity base compared to debt obligations.

In summary, while total debt remains relatively stable with minor increases, the equity base strengthens considerably over the period. This dynamic results in a pronounced reduction in leverage, suggesting increased financial resilience and potential for enhanced creditworthiness or investment capacity.

Total Debt

The total debt level shows a gradual decline from US$1,640 million in 2020 to US$1,489 million in 2024, indicating a steady reduction in debt over the five-year period. This trend suggests a focus on deleveraging or stabilization of financial obligations.

Total Capital

Total capital has shown a consistent and significant increase each year, rising from US$4,475 million in 2020 to US$11,098 million in 2024. This represents nearly a 2.5 times growth over the period, implying substantial capital accumulation or asset growth.

Debt to Capital Ratio

The debt to capital ratio has steadily decreased from 0.37 in 2020 to 0.13 in 2024. This downward trend is consistent with the reduction in total debt combined with an increase in total capital. The declining ratio indicates strengthening financial leverage with a lower proportion of debt relative to overall capital, reflecting improved solvency and potentially lower financial risk.

Total Debt (including operating lease liability)

The total debt remained relatively stable over the five-year period, increasing slightly from $2,135 million in 2020 to $2,278 million in 2024. The incremental changes each year were modest, indicating consistent debt management with no significant new debt issuance or repayment activity that dramatically altered the debt level.

Total Capital (including operating lease liability)

Total capital experienced substantial growth throughout the period, increasing from $4,970 million in 2020 to $11,887 million in 2024. This represents an increase of approximately 139%, reflecting significant capital expansion. The most notable increases occurred between 2022 and 2024, where capital rose sharply, which may be attributed to equity raises, retained earnings growth, or asset base expansion.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio demonstrated a clear downward trend, decreasing from 0.43 in 2020 to 0.19 in 2024. This indicates an overall reduction in leverage relative to the company’s capital base. The declining ratio suggests improved capital structure and financial risk profile, likely due to capital growth outpacing increases in debt. The ratio's steady decline each year points to a strategic emphasis on strengthening the balance sheet and possibly prioritizing equity financing or internal capital generation over debt.

Total debt

The total debt level has shown a slight but consistent decline from US$1,640 million in 2020 to US$1,486 million in 2022, stabilizing around US$1,488 million and US$1,489 million in 2023 and 2024, respectively. This indicates a modest reduction in borrowing over the observed years, with debt levels holding relatively steady in the most recent periods.

Total assets

Total assets have exhibited a strong upward trend, increasing substantially from US$8,715 million in 2020 to US$20,383 million in 2024. This significant growth in asset base over five years suggests ongoing investments and expansion efforts, enhancing the company's capacity and possibly its market value.

Debt to assets ratio

The debt to assets ratio has improved notably, decreasing from 0.19 in 2020 to 0.07 in 2024. This decline reflects a stronger asset position relative to debt, indicating that the company is becoming less leveraged and potentially more financially stable. The decreasing ratio aligns with the modest debt decline juxtaposed against a rapidly growing asset base.

Total debt (including operating lease liability)

The total debt has shown a slight increase over the five-year period, rising from 2135 million USD in 2020 to 2278 million USD in 2024. The increase is gradual and relatively modest, indicating stable debt management without significant borrowing surges.

Total assets

Total assets have experienced substantial growth, increasing from 8715 million USD in 2020 to 20383 million USD in 2024. This demonstrates a strong expansion of the asset base, more than doubling over the period, which suggests active investment in growth and asset acquisition.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio has steadily declined from 0.24 in 2020 to 0.11 in 2024. This indicates an improving financial structure, with the company increasing its asset base at a faster rate than its debt, thereby reducing leverage and enhancing solvency over time.

Total Assets

The total assets demonstrated a consistent upward trend over the analyzed period. Starting from $8,715 million at the end of 2020, total assets increased steadily each year, reaching $20,383 million by the end of 2024. This represents a more than twofold growth, indicating substantial expansion in the company's asset base.

Stockholders’ Equity

Stockholders’ equity also exhibited significant growth throughout the period. Beginning at $2,834 million in 2020, equity rose consistently each year to reach $9,609 million in 2024. The substantial increase in equity suggests an improvement in the company’s net worth and potential reinvestment of earnings or capital inflows.

Financial Leverage

The financial leverage ratio showed a clear declining pattern over the five-year span. From a ratio of 3.07 in 2020, it decreased steadily to 2.12 in 2024. This reduction indicates a lower reliance on debt financing relative to equity, reflecting a stronger equity position in financing the company’s assets and potentially reduced financial risk.

Overall Analysis

The data reflects a period of robust growth in both asset accumulation and equity strengthening, accompanied by a prudent reduction in financial leverage. This suggests an overall improvement in the company's financial stability and capital structure. The trends imply effective management of growth and resources, favoring increased equity financing and a gradual deleveraging approach.

Earnings before interest and tax (EBIT)

The EBIT demonstrates a strong upward trend over the five-year period, increasing from US$182 million in 2020 to US$1,761 million in 2024. Notably, the EBIT more than doubled between 2022 and 2023, indicating a significant improvement in operating profitability. This robust growth suggests effective operational management and expansion during the period analyzed.

Interest Expense

The interest expense shows a gradual decline, decreasing from US$33 million in 2020 to US$23 million in 2024. This downward trend possibly reflects reduced borrowing costs or lower debt levels, contributing to improved financial efficiency and reduced financial burden on the company.

Interest Coverage Ratio

The interest coverage ratio, which measures the company's ability to meet interest obligations from EBIT, improves markedly from 5.56 in 2020 to 76.57 in 2024. This sharp increase reflects both the substantial rise in EBIT and the reduction in interest expense, highlighting a stronger capacity to cover interest payments and enhanced financial stability.

Earnings before Fixed Charges and Tax

The earnings before fixed charges and tax exhibited a strong upward trend throughout the period. Starting at 265 million US dollars in 2020, the figure increased to 377 million in 2021 and 538 million in 2022. The growth significantly accelerated in 2023, reaching 1,161 million, and continued to rise sharply to 1,891 million in 2024. This indicates substantial operational improvement and profitability growth over the five-year span.

Fixed Charges

Fixed charges increased moderately during the first four years, rising from 116 million US dollars in 2020 to 153 million in 2023. The figure then stabilized, remaining constant at 153 million in 2024. This pattern suggests that the company managed to contain fixed costs growth relative to the expansion in earnings.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio demonstrated a consistent and substantial improvement over the period. Beginning at 2.29 times in 2020, the ratio increased to 2.95 in 2021 and further to 3.87 in 2022. A marked escalation occurred in 2023, with the ratio doubling to 7.59, followed by additional growth to 12.36 in 2024. This trend reflects enhanced capacity to cover fixed charges with earnings, indicating reduced financial risk and stronger financial health.