ServiceNow Inc. (NYSE:NOW)

The liquidity position, as indicated by the assessed ratios, demonstrates a generally stable, though subtly shifting, trend over the five-year period. While all three ratios – current, quick, and cash – remain above one, suggesting sufficient short-term asset coverage of short-term liabilities, a slight decline is observable towards the end of the period.

Current Ratio

The current ratio experienced a modest increase from 1.05 in 2021 to 1.11 in 2022, indicating improved ability to cover current liabilities with current assets. This was followed by a slight decrease to 1.06 in 2023, a rebound to 1.10 in 2024, and a final decrease to 1.00 in 2025. The ratio’s movement suggests fluctuations in the composition of current assets and liabilities, but remains relatively consistent overall.

Quick Ratio

The quick ratio followed a similar pattern to the current ratio, increasing from 1.01 in 2021 to 1.06 in 2022. It then decreased to 1.00 in 2023, increased slightly to 1.02 in 2024, and experienced a more noticeable decline to 0.91 in 2025. This suggests a decreasing ability to meet short-term obligations with the most liquid assets, potentially indicating a shift in the composition of current assets towards less liquid components like inventory.

Cash Ratio

The cash ratio exhibited the most stable trend of the three, ranging between 0.60 and 0.71. It increased from 0.67 in 2021 to 0.71 in 2022, decreased to 0.66 in 2023, increased to 0.69 in 2024, and then decreased to 0.60 in 2025. This indicates a consistent, though slightly diminishing, capacity to cover immediate liabilities with cash and cash equivalents. The decline in 2025 warrants further investigation.

Overall, the observed trends suggest a gradual weakening of the liquidity position towards the end of the analyzed period. While the ratios remain at acceptable levels, the downward movement in the quick and cash ratios, particularly in 2025, could indicate a need for monitoring and potential adjustments to asset management strategies.

The current ratio exhibited a fluctuating pattern over the five-year period. Initially, the ratio increased from 1.05 in 2021 to 1.11 in 2022, indicating an improved ability to cover short-term obligations with short-term assets. This was followed by a slight decrease to 1.06 in 2023. A modest recovery was then observed in 2024, with the ratio reaching 1.10. However, the most recent year, 2025, shows a decline to 1.00, returning the ratio to a level comparable to that of 2021.

Current Ratio Trend

The current ratio demonstrates a lack of consistent directional movement. While there were periods of improvement, the ratio ultimately concluded at the same level as its starting point. This suggests that while the company generally maintains sufficient current assets to cover current liabilities, the relationship between these two components is not consistently strengthening.

Underlying Component Analysis

Both current assets and current liabilities increased throughout the period. The initial increase in the current ratio from 2021 to 2022 suggests that current assets grew at a faster rate than current liabilities. However, the subsequent fluctuations indicate that the growth rates of these components have varied, leading to the observed changes in the current ratio. The decline in 2025 is attributable to current liabilities increasing at a faster rate than current assets.

Implications

A current ratio of 1.00 indicates that the company has exactly enough current assets to cover its current liabilities. While not necessarily indicative of immediate financial distress, this level offers limited margin for error. A sustained decline below 1.00 could signal potential liquidity challenges. The fluctuations observed suggest a dynamic relationship between short-term assets and liabilities that warrants continued monitoring.

The quick ratio exhibited a generally stable pattern between 2021 and 2024, followed by a decline in the most recent period. Total quick assets and current liabilities both increased over the five-year period, but the rate of increase in liabilities exceeded that of quick assets in 2025.

Quick Ratio Trend

The quick ratio began at 1.01 in 2021, increased to 1.06 in 2022, and then slightly decreased to 1.00 in 2023. A minor increase to 1.02 was observed in 2024 before a more noticeable decline to 0.91 in 2025. This suggests a weakening in the company’s ability to meet its short-term obligations with its most liquid assets in the latest year.

Quick Assets

Total quick assets demonstrated consistent growth, increasing from US$4,997 million in 2021 to US$9,501 million in 2025. The largest absolute increase occurred between 2023 and 2024, with an addition of US$1,145 million. Growth rates decelerated in 2025.

Current Liabilities

Current liabilities also increased throughout the period, rising from US$4,949 million in 2021 to US$10,443 million in 2025. The increase between 2024 and 2025 was particularly substantial, amounting to US$2,085 million, and represents the largest single-year increase in the observed period. This accelerated growth in liabilities contributed to the decline in the quick ratio in 2025.

The observed trend in the quick ratio warrants further investigation. While the ratio remained above 1.0 for the majority of the period, indicating sufficient liquid assets to cover immediate liabilities, the decrease in 2025 suggests a potential reduction in short-term financial flexibility.

The cash ratio exhibited a generally stable pattern over the five-year period, with some fluctuation. Total cash assets increased consistently year-over-year, while current liabilities also demonstrated a consistent upward trend, resulting in a relatively contained range for the calculated cash ratio.

Cash Ratio Trend

The cash ratio began at 0.67 in 2021, increased to 0.71 in 2022, then decreased slightly to 0.66 in 2023. A modest increase to 0.69 was observed in 2024, followed by a decrease to 0.60 in 2025. This suggests a slight weakening in the company’s ability to cover its current liabilities with only cash assets in the most recent year.

Cash Asset Growth

Total cash assets increased from US$3,304 million in 2021 to US$6,284 million in 2025, representing a substantial overall increase. The year-over-year growth rates were consistently positive, indicating a continuous accumulation of cash and cash equivalents.

Current Liability Growth

Current liabilities also increased consistently throughout the period, rising from US$4,949 million in 2021 to US$10,443 million in 2025. The rate of increase in current liabilities appeared to accelerate in later years, potentially contributing to the observed decrease in the cash ratio in 2025.

While the cash ratio remained above 0.60 throughout the period, the decline in 2025 warrants monitoring. The increasing current liabilities, coupled with a relatively stable cash ratio, suggest the company may be relying more on other current assets to meet its short-term obligations.