Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
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Short-term Activity Ratios (Summary)
ServiceNow Inc., short-term (operating) activity ratios
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).
- Receivables Turnover
- The receivables turnover ratio exhibits a slight decline from 4.48 in 2020 to 4.2 in 2022, indicating a gradual decrease in the efficiency of collecting receivables during this period. However, it improves subsequently, reaching 4.9 by 2024, suggesting enhanced collection management towards the end of the observed timeframe.
- Payables Turnover
- The payables turnover shows significant fluctuations. It decreases sharply from 28.83 in 2020 to 5.74 in 2022, implying a longer duration to settle payables during those years. The ratio then recovers notably, rising to 33.63 in 2024, which signals a much quicker payment cycle in the final year.
- Working Capital Turnover
- There is considerable volatility in the working capital turnover. After a moderate ratio of 5.76 in 2020, it increases dramatically to 21.76 in 2021 but then drops to 11.16 in 2022. The trend reverses again with an increase to 21.77 in 2023, followed by another decrease to 13.25 in 2024. This fluctuation indicates varying efficiency in the utilization of working capital over the years.
- Average Receivable Collection Period
- The average collection period for receivables gradually lengthened from 82 days in 2020 to 87 days in 2022, reflecting slower collection practices. After this peak, the period shortens to 74 days by 2024, consistent with the improved receivables turnover noted in later years.
- Average Payables Payment Period
- The payables payment period shows a significant extension from 13 days in 2020 to 64 days in 2022, indicating delayed payments to suppliers during that time. This period then contracts sharply, reaching 11 days in 2024, which aligns with the increased payables turnover and suggests accelerated supplier payments near the end of the period.
Turnover Ratios
Average No. Days
Receivables Turnover
ServiceNow Inc., receivables turnover 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) | ||||||
| Revenues | ||||||
| Accounts receivable, net | ||||||
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | ||||||
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Receivables Turnover, Sector | ||||||
| Software & Services | ||||||
| Receivables Turnover, Industry | ||||||
| Information Technology | ||||||
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
Receivables turnover = Revenues ÷ Accounts receivable, net
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- There is a consistent upward trajectory in revenues from 2020 through 2024. The revenues increased steadily from $4,519 million in 2020 to $10,984 million in 2024, indicating strong growth. The yearly increments suggest accelerating growth in the latter years, with the largest absolute revenue increase observed between 2023 and 2024.
- Accounts Receivable Analysis
- Accounts receivable, net, also show an increasing trend over the analyzed period, rising from $1,009 million in 2020 to $2,240 million in 2024. This increase aligns with the growth in revenues, which typically leads to higher accounts receivable balances. However, the relative growth in receivables appears somewhat moderate in comparison to revenue growth toward the later years, indicating possible improvements in collections or credit policies.
- Receivables Turnover Ratio
- The receivables turnover ratio exhibits slight variability but generally remains within a moderate range. Starting at 4.48 in 2020, it declined to a low of 4.20 in 2022 and then improved to 4.90 by 2024. This suggests that the efficiency of collecting receivables initially dipped but improved over the last two years, reflecting potentially more effective credit management or faster collection processes in recent periods.
- Overall Insights
- The financial data indicate overall growth in core operational metrics. Revenue growth outpaces the increase in accounts receivable, and the receivables turnover ratio improvement towards the end of the period suggests enhanced credit and collection practices. Together, these trends point to strengthening operational efficiency alongside expanding business volume.
Payables Turnover
ServiceNow Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenues | ||||||
| Accounts payable | ||||||
| Short-term Activity Ratio | ||||||
| Payables turnover1 | ||||||
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Payables Turnover, Sector | ||||||
| Software & Services | ||||||
| Payables Turnover, Industry | ||||||
| Information Technology | ||||||
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
Payables turnover = Cost of revenues ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
- Cost of revenues
- The cost of revenues has exhibited a steady upward trend from 987 million USD in 2020 to 2287 million USD in 2024. This represents a more than twofold increase over the five-year period, indicating a consistent rise in the company's expenditure related to revenue generation.
- Accounts payable
- Accounts payable figures have fluctuated significantly during the analyzed period. Starting at 34 million USD in 2020, the figure increased sharply to 274 million USD in 2022, before declining to 68 million USD in 2024. This volatility indicates varying payment or purchasing patterns that could reflect changes in supplier terms or operational adjustments.
- Payables turnover ratio
- The payables turnover ratio has shown considerable variability. It started at a high level of 28.83 in 2020, declined markedly to 5.74 by 2022, then rebounded strongly to 33.63 in 2024. These movements suggest fluctuations in how quickly the company is settling its supplier obligations, with slower turnover in the middle years followed by a return to more rapid payment cycles in the most recent year.
Working Capital Turnover
ServiceNow Inc., working capital turnover 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 | ||||||
| Less: Current liabilities | ||||||
| Working capital | ||||||
| Revenues | ||||||
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | ||||||
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Working Capital Turnover, Sector | ||||||
| Software & Services | ||||||
| Working Capital Turnover, Industry | ||||||
| Information Technology | ||||||
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
Working capital turnover = Revenues ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital levels have exhibited notable fluctuations over the observed period. Starting at 785 million USD in 2020, there was a sharp decline to 271 million USD in 2021. This was followed by a recovery to 649 million USD in 2022, a subsequent decrease to 412 million USD in 2023, and finally an increase to 829 million USD in 2024. These variations suggest changing short-term liquidity management or operational adjustments within the company.
- Revenues
- Revenues demonstrated a consistent and strong upward trend throughout the period. Beginning at 4,519 million USD in 2020, the company achieved steady growth each year, reaching 5,896 million USD in 2021, 7,245 million USD in 2022, 8,971 million USD in 2023, and 10,984 million USD by 2024. This progression reflects sustained expansion and increasing sales performance over the five years.
- Working Capital Turnover
- The working capital turnover ratio showed significant volatility across the years. It surged from 5.76 in 2020 to a peak of 21.76 in 2021, indicating a much more efficient use of working capital relative to sales in that year. However, it decreased to 11.16 in 2022, before rising again to approximately 21.77 in 2023 and then dropping to 13.25 in 2024. This pattern suggests fluctuations in how effectively the company utilized its working capital in generating revenues, possibly influenced by changes in either the working capital base or revenue recognition timing.
- Overall Insights
- The financial data reveals a company experiencing rapid revenue growth alongside variable working capital management efficiency. The inconsistent working capital levels and turnover ratios imply active capital management strategies or operational shifts that impact liquidity usage. Despite this, the upward trend in revenues emphasizes strong business expansion and market performance over the five-year horizon.
Average Receivable Collection Period
ServiceNow Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Average Receivable Collection Period, Sector | ||||||
| Software & Services | ||||||
| Average Receivable Collection Period, Industry | ||||||
| Information Technology | ||||||
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
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibited a gradual decline from 4.48 in 2020 to 4.20 in 2022, indicating a slightly slower frequency of collecting accounts receivable over this period. However, this trend reversed in the following years, with the ratio increasing to 4.41 in 2023 and further to 4.90 in 2024, suggesting enhanced efficiency in receivables collection during the most recent periods.
- Average Receivable Collection Period
- The average receivable collection period initially increased from 82 days in 2020 to 87 days in 2022, signaling that the time taken to collect receivables was lengthening. This trend then reversed, with the collection period decreasing to 83 days in 2023 and further improving to 74 days in 2024. This shortening of the collection period aligns with the increased receivables turnover, reinforcing the observation of improved collection efficiency in recent years.
- Overall Insights
- The data reflects a period of declining receivables management efficiency from 2020 through 2022, as indicated by a decrease in turnover ratio and extended collection periods. From 2023 onwards, the company demonstrated significant improvement, achieving higher turnover ratios and reduced collection days, which implies more effective management of credit and receivables. The latest data point in 2024 shows the strongest performance in the observed timeframe.
Average Payables Payment Period
ServiceNow Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Average Payables Payment Period, Sector | ||||||
| Software & Services | ||||||
| Average Payables Payment Period, Industry | ||||||
| Information Technology | ||||||
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
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover Ratio
- The payables turnover ratio exhibits significant volatility over the analyzed periods. Starting at a high of 28.83 in 2020, it almost halves to 15.2 in 2021, then sharply declines to 5.74 in 2022. This decline indicates a slower rate of paying suppliers or a buildup of accounts payable. However, in 2023, the ratio rebounds to 15.25 and surges past previous levels to 33.63 in 2024, suggesting a sudden acceleration in payment frequency to vendors or efficient management of payables towards the end of the period.
- Average Payables Payment Period
- The average payables payment period, measured in days, moves inversely to the turnover ratio as expected. It starts at a low 13 days in 2020, increases substantially to 24 days in 2021, then spikes dramatically to 64 days in 2022—indicating longer durations taken to settle payables, which may reflect cash flow strategies or negotiation of payment terms. Following this peak, the period contracts back to 24 days in 2023 and further reduces to 11 days in 2024, highlighting a return to quicker payment cycles and improved liquidity management.
- Overall Insights
- The data reveals cyclical fluctuations in the company's payables management practices. The substantial increase in the average payment period in 2022 paired with the drop in turnover ratio suggests a deliberate extension of payables, potentially to preserve cash or due to operational challenges. The subsequent years show a reversal of this trend, indicating a focus on strengthening supplier relationships or optimizing working capital efficiency through faster payments. By 2024, the company achieves a notably efficient payables turnover, which may support better credit terms or reflect improved operational cash flow.