Cadence Design Systems Inc (CDNS)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	0.82	2.39	2.90	2.65	4.02
Receivables turnover	—	—	—	—	—
Payables turnover	—	—	—	—	—
Working capital turnover	1.75	10.61	9.92	4.01	3.94

Cadence Design Systems Inc's activity ratios reflect its efficiency in managing its resources.

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory within a given period.
- The trend for Cadence Design Systems Inc's inventory turnover shows a decrease from 4.02 in 2020 to 0.82 in 2024. A decreasing inventory turnover may indicate slower sales or excess inventory on hand, which could tie up capital and lead to potential obsolescence.

2. Receivables Turnover:
- Receivables turnover ratio indicates how effectively a company collects its accounts receivable during a specific period.
- Cadence Design Systems Inc did not provide data for receivables turnover, which makes it challenging to assess the effectiveness of the company in collecting payments from customers.

3. Payables Turnover:
- Payables turnover ratio measures how quickly a company pays its suppliers.
- Similar to receivables turnover, Cadence Design Systems Inc did not disclose data for payables turnover, which limits the ability to gauge the company's payment performance.

4. Working Capital Turnover:
- The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales.
- The trend for Cadence Design Systems Inc's working capital turnover shows an increase from 3.94 in 2020 to 10.61 in 2023, before decreasing to 1.75 in 2024. A high working capital turnover ratio indicates efficient utilization of resources to generate sales, while a decline in this ratio may signal inefficiencies in working capital management.

In summary, Cadence Design Systems Inc's activity ratios suggest fluctuations in inventory turnover and working capital turnover over the years, which may require further analysis to understand the underlying factors impacting the company's operational efficiency. The lack of data for receivables and payables turnover ratios limits a comprehensive assessment of the company's performance in managing accounts receivable and payables.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	446.01	152.41	125.72	137.58	90.75
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—

Cadence Design Systems Inc's Days of Inventory on Hand (DOH) has shown an increasing trend over the years, from 90.75 days in December 31, 2020, to a significantly higher 446.01 days by December 31, 2024. This indicates that the company is holding inventory for a longer period, which may tie up capital and potentially signal inefficiencies in inventory management or slowing sales.

The Days of Sales Outstanding (DSO) and Number of Days of Payables data is not available for the specified years, which limits the comprehensive analysis of Cadence Design Systems Inc's activity ratios. However, based on the available information on DOH, it is advisable for the company to focus on optimizing inventory levels to improve cash flow and operational efficiency.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	—	—	9.59	9.77	8.62
Total asset turnover	0.52	0.72	0.69	0.68	0.68

The fixed asset turnover ratio for Cadence Design Systems Inc has shown an improving trend over the years, increasing from 8.62 in 2020 to 9.77 in 2021 and then slightly decreasing to 9.59 in 2022. The company did not report values for 2023 and 2024. This ratio indicates that Cadence is generating more revenue relative to its investment in fixed assets, reflecting efficient utilization of these assets in generating sales.

On the other hand, the total asset turnover ratio has been relatively stable, staying around 0.68 in 2020 and 2021, increasing slightly to 0.69 in 2022, further rising to 0.72 in 2023, and then decreasing to 0.52 in 2024. This ratio suggests that Cadence is efficiently generating sales in proportion to its total assets.

Overall, the company's fixed asset turnover shows an improving trend, indicating better efficiency in utilizing fixed assets to generate sales. The total asset turnover, while relatively stable, saw some fluctuations in recent years, warranting further analysis to understand the driving factors behind these changes.