ServiceNow Inc. (NYSE:NOW)

The solvency ratios presented demonstrate a consistent trend of decreasing leverage across the observed period, spanning from March 31, 2022, to December 31, 2025. This suggests a strengthening financial position with a reduced reliance on debt financing. The decline is evident across all ratios examined, indicating a broad-based improvement in the company’s capital structure.

Debt to Equity

The debt to equity ratio exhibits a steady decrease, moving from 0.39 in March 2022 to 0.12 in December 2025. This indicates a growing proportion of equity financing relative to debt, enhancing the company’s financial stability. The rate of decline appears consistent throughout the period.

Debt to Equity (Including Operating Lease Liability)

Similar to the standard debt to equity ratio, this metric also shows a consistent downward trend, decreasing from 0.55 in March 2022 to 0.19 in December 2025. The inclusion of operating lease liabilities results in higher ratio values compared to the standard debt to equity ratio, but the trend remains consistent, signifying a reduction in overall leverage when considering lease obligations.

Debt to Capital

The debt to capital ratio declines from 0.28 in March 2022 to 0.10 in December 2025. This indicates a decreasing proportion of debt in the company’s capital structure, suggesting a shift towards a more conservative financing approach. The decline is relatively smooth and consistent.

Debt to Capital (Including Operating Lease Liability)

This ratio mirrors the trend of the standard debt to capital ratio, decreasing from 0.36 in March 2022 to 0.16 in December 2025. Again, incorporating operating lease liabilities results in higher values, but the overall trend of decreasing leverage remains clear.

Debt to Assets

The debt to assets ratio demonstrates a decline from 0.14 in March 2022 to 0.06 in December 2025. This signifies a decreasing proportion of assets financed by debt, indicating a stronger asset base relative to liabilities. The reduction is gradual and consistent.

Debt to Assets (Including Operating Lease Liability)

This ratio, including operating lease liabilities, also shows a decreasing trend, moving from 0.20 in March 2022 to 0.09 in December 2025. The inclusion of lease obligations results in higher values, but the overall trend of decreasing leverage is maintained.

Financial Leverage

Financial leverage, measured as total assets to total equity, fluctuates somewhat but generally decreases over the period, starting at 2.75 in March 2022 and ending at 2.01 in December 2025. While there are minor increases in some quarters (e.g., December 2022), the overall trend indicates a reduction in the company’s reliance on financial leverage. The fluctuations are less pronounced than the consistent declines observed in the debt ratios.

In summary, the observed trends across all solvency ratios consistently point towards a strengthening financial position and a decreasing reliance on debt financing. This suggests improved financial flexibility and reduced risk over the analyzed period.

The debt to equity ratio demonstrates a consistent downward trend over the observed period, spanning from March 31, 2022, to December 31, 2025. This indicates a strengthening of the company’s financial position with respect to its leverage.

Overall Trend

The ratio decreased from 0.39 in March 2022 to 0.12 by December 2025. This represents a substantial reduction in the proportion of debt financing relative to equity financing.

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

From March 31, 2022, to December 31, 2022, the debt to equity ratio experienced a moderate decline, moving from 0.39 to 0.30. This initial decrease suggests a deliberate effort to reduce debt or an increase in equity during this period.

Acceleration of Decline (Mar 31, 2023 – Dec 31, 2024)

The rate of decline accelerated between March 31, 2023, and December 31, 2024. The ratio fell from 0.27 to 0.15, indicating a more pronounced shift towards equity financing. This period likely reflects significant equity growth or a focused debt reduction strategy.

Stabilization of Decline (Mar 31, 2025 – Dec 31, 2025)

The decline continued, but at a slower pace, from March 31, 2025, to December 31, 2025, decreasing from 0.15 to 0.12. While still decreasing, the diminishing rate of change suggests the company is approaching a potentially sustainable level of debt relative to equity.

Debt and Equity Movements

Total debt remained relatively stable throughout the period, fluctuating within a narrow range between US$1,485 million and US$1,491 million. The primary driver of the decreasing debt to equity ratio is the substantial growth in stockholders’ equity, which increased from US$3,997 million in March 2022 to US$12,964 million in December 2025.

The consistent reduction in the debt to equity ratio suggests improving financial health and reduced financial risk. The company appears to be increasingly financed by equity rather than debt, which generally enhances its long-term stability.

The debt to equity ratio, incorporating operating lease liabilities, demonstrates a consistent downward trend over the observed period spanning from March 31, 2022, to December 31, 2025. This indicates a strengthening of the company’s financial position with respect to its leverage.

Overall Trend

From a ratio of 0.55 in March 2022, the metric progressively decreased to 0.19 by December 2025. This signifies a reduction in the proportion of debt financing relative to equity financing.

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

The ratio experienced a relatively rapid decline during this period, moving from 0.55 to 0.44. This suggests a deliberate effort to reduce debt or a substantial increase in equity during this timeframe.

Stabilization and Continued Decline (Mar 31, 2023 – Dec 31, 2024)

The rate of decline moderated between March 2023 and December 2024, with the ratio decreasing from 0.40 to 0.26. While still decreasing, the changes were less pronounced than in the prior period.

Final Phase (Mar 31, 2025 – Dec 31, 2025)

The decline continued, albeit at a slower pace, reaching 0.19 by December 2025. This suggests the company continued to prioritize equity financing or effectively manage its debt obligations.

Equity Growth

The consistent decrease in the debt to equity ratio is strongly correlated with a significant increase in stockholders’ equity, which grew from US$3,997 million in March 2022 to US$12,964 million in December 2025. This growth in equity is a primary driver of the observed ratio decline.

Debt Stability

Total debt, including operating lease liability, remained relatively stable throughout the period, fluctuating between US$2,125 million and US$2,409 million. The primary influence on the ratio is therefore the growth of equity, rather than a significant reduction in debt.

In conclusion, the observed trend indicates a strengthening financial structure, characterized by a decreasing reliance on debt financing and a substantial increase in equity. This suggests improved financial flexibility and reduced financial risk.

The debt to capital ratio demonstrates a consistent downward trend over the observed period, spanning from March 31, 2022, to December 31, 2025. This indicates a decreasing reliance on debt financing relative to the company’s total capital structure.

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

The debt to capital ratio began at 0.28 in March 2022 and steadily declined to 0.23 by December 2022. This initial decrease suggests a proactive approach to managing debt levels or an increase in capital contributions during this timeframe.

Continued Decline (Mar 31, 2023 – Dec 31, 2024)

The downward trajectory continued through 2023 and 2024, with the ratio falling from 0.21 in March 2023 to 0.13 by December 2024. This period exhibits a more pronounced rate of decline compared to the previous year, potentially reflecting significant capital increases or debt repayments.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The decline moderated slightly in the most recent periods, moving from 0.13 in March 2025 to 0.10 in December 2025. While still decreasing, the slower pace suggests a stabilization of the capital structure or a shift in financing strategies.

Total Debt

Total debt remained relatively stable throughout the analyzed period, fluctuating between US$1,485 million and US$1,491 million. This suggests that the primary driver of the decreasing debt to capital ratio is the growth in total capital, rather than significant reductions in debt.

Total Capital

Total capital experienced substantial growth, increasing from US$5,569 million in March 2022 to US$14,455 million by December 2025. This significant expansion of the capital base is the key factor contributing to the observed decline in the debt to capital ratio.

Overall, the consistent decrease in the debt to capital ratio indicates strengthening solvency and a more conservative capital structure. The company appears to be successfully increasing its capital base while maintaining relatively stable debt levels.

The Debt to Capital ratio, incorporating operating lease liabilities, demonstrates a consistent downward trend over the observed period from March 31, 2022, to December 31, 2025. This indicates a decreasing reliance on debt financing relative to the company’s total capital structure.

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

The ratio began at 0.36 in March 2022 and steadily declined to 0.31 by December 2022. This initial decrease suggests a proactive approach to managing leverage during this timeframe, potentially through debt reduction or capital increases.

Continued Decline (Mar 31, 2023 – Dec 31, 2024)

The downward trajectory continued into 2023, with the ratio falling to 0.24 by March 2023. Further reductions were observed through December 2024, reaching a value of 0.21. This period reflects a sustained effort to improve the company’s financial leverage position.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The rate of decline slowed somewhat in the most recent period, with the ratio decreasing from 0.19 in March 2025 to 0.16 by December 2025. While still decreasing, the smaller incremental changes suggest a potential stabilization of the capital structure or a shift in financing strategy.

Total Debt and Total Capital

Total debt remained relatively stable, fluctuating between US$2.125 million and US$2.409 million throughout the period. However, total capital experienced significant growth, increasing from US$6.204 million in March 2022 to US$15.367 million in December 2025. This substantial increase in capital, exceeding the growth in debt, is the primary driver of the observed decline in the Debt to Capital ratio.

Overall, the consistent decrease in the Debt to Capital ratio indicates strengthening solvency and a more conservative capital structure. The company appears to be successfully increasing its equity base relative to its debt obligations.

The debt to assets ratio for the analyzed period demonstrates a consistent downward trend, indicating a strengthening solvency position. Initially, the ratio stood at 0.14 in March 2022, and progressively decreased over the subsequent ten quarters to reach 0.06 by December 2025.

Overall Trend

A clear and sustained decline in the debt to assets ratio is observed throughout the period. This suggests that asset growth has consistently outpaced debt accumulation, leading to a reduced reliance on debt financing relative to the company’s asset base.

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

The ratio experienced a moderate decrease from 0.14 to 0.11 during this phase. While still representing a notable level of debt relative to assets, the initial decline suggests early efforts to manage leverage.

Stabilization and Further Decline (Mar 31, 2023 – Dec 31, 2024)

The ratio stabilized around 0.10 to 0.08 during this period, indicating a slower rate of decline. This could be attributed to a period of strategic investment or a deliberate approach to debt reduction.

Accelerated Improvement (Mar 31, 2025 – Dec 31, 2025)

The final phase exhibits a more pronounced decrease, with the ratio falling from 0.07 to 0.06. This suggests a more aggressive approach to debt management or a significant increase in asset value relative to debt.

The consistent reduction in the debt to assets ratio throughout the analyzed period suggests improving financial health and a decreasing level of financial risk. The company appears to be effectively managing its debt levels in relation to its growing asset base.

The debt to assets ratio, including operating lease liabilities, demonstrates a consistent downward trend over the observed period from March 31, 2022, to December 31, 2025. This indicates a decreasing reliance on debt financing relative to the company’s asset base.

Overall Trend

The ratio began at 0.20 in March 2022 and progressively declined to 0.09 by December 2025. This represents a more than 55% decrease in the proportion of assets financed by debt over the analyzed timeframe.

Initial Phase (March 31, 2022 – June 30, 2022)

A slight decrease is observed from 0.20 to 0.19 during this period. This initial reduction suggests early efforts to manage debt levels or a concurrent increase in asset values.

Stabilization and Moderate Decline (July 1, 2022 – December 31, 2023)

The ratio remained relatively stable between 0.19 and 0.17 during this phase. A gradual decline continued, but at a slower pace, indicating a consistent, yet measured, approach to debt reduction. The ratio decreased from 0.15 to 0.13 during this period.

Accelerated Decline (March 31, 2024 – December 31, 2025)

The most significant reduction in the ratio occurred in this period, falling from 0.13 to 0.09. This suggests a more aggressive strategy to lower debt or substantial growth in total assets. The rate of decline accelerated, indicating a strengthening financial position.

Asset and Debt Movements

Total debt remained relatively consistent between approximately US$2.1 billion and US$2.4 billion throughout the period. The primary driver of the declining ratio appears to be the substantial growth in total assets, which increased from US$10.99 billion to US$26.04 billion. This indicates that asset growth significantly outpaced any increases in debt.

In conclusion, the observed trend suggests improving solvency as the company’s asset base expands while maintaining a controlled level of debt. The decreasing ratio indicates a reduced financial risk profile.

Financial leverage, as indicated by the provided figures, demonstrates a generally decreasing trend over the observed period, although with some fluctuation. Initially, the ratio stood at 2.75 and subsequently decreased to a low of 1.93 before increasing slightly to 2.01. This suggests a shifting capital structure, with a relative decrease in reliance on financial leverage to fund assets.

Overall Trend

From March 31, 2022, through September 30, 2023, a consistent downward trend in financial leverage is apparent. The ratio decreased from 2.75 to 2.10. This indicates that the company was reducing its debt relative to equity during this period, potentially strengthening its financial position.

Fluctuations and Recent Changes

Following the decline, the ratio experienced an increase from 2.10 in September 2023 to 2.28 in December 2023. This was followed by a decrease to 2.01 in March 2025. These fluctuations suggest potential changes in financing strategies or asset acquisition patterns. The most recent figures indicate a slight increase in leverage, but remain below the levels observed in the earlier part of the period.

Long-Term Perspective

Comparing the beginning and end of the observed timeframe, the financial leverage ratio decreased from 2.75 in March 2022 to 2.01 in March 2025. This represents a notable reduction in the proportion of assets financed by debt. The company’s ability to maintain a relatively stable ratio in the most recent quarters suggests a deliberate approach to capital structure management.

The observed trends suggest a move towards a more conservative financial structure, potentially reducing financial risk. However, the fluctuations warrant further investigation to understand the underlying drivers of these changes and their implications for future financial performance.