Cadence Design Systems Inc (CDNS)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	5.60	7.16	7.07	9.80	12.28
Receivables turnover	8.27	7.26	8.79	7.86	7.58
Payables turnover	—	—	—	—	—
Working capital turnover	10.51	9.84	3.99	3.90	4.65

Cadence Design Systems, Inc. has shown some fluctuations in its activity ratios over the last five years.

1. Inventory Turnover:
Cadence Design Systems' inventory turnover has decreased from 4.77 in 2019 to 2.39 in 2023. This indicates that the company is holding onto its inventory for a longer period in 2023 compared to previous years, which may suggest inefficiencies or slower sales.

2. Receivables Turnover:
The receivables turnover has generally been stable over the years, with a slight increase from 7.67 in 2019 to 8.36 in 2023. This indicates that the company is collecting its receivables more efficiently in 2023.

3. Payables Turnover:
The payables turnover ratio data is not available for 2022 and the previous years. Further analysis would be needed to assess the company's payment cycle in relation to its suppliers.

4. Working Capital Turnover:
The working capital turnover ratio has shown an increasing trend, from 4.70 in 2019 to 10.61 in 2023. This suggests that Cadence Design Systems is generating more revenue from its working capital in 2023, which indicates improved efficiency in its operations.

Overall, while there are some areas of improvement needed, such as inventory management, Cadence Design Systems has shown positive trends in terms of receivables turnover and working capital turnover which indicates improved efficiency in managing its assets.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	65.14	50.99	51.63	37.25	29.71
Days of sales outstanding (DSO)	days	44.11	50.26	41.52	46.42	48.15
Number of days of payables	days	—	—	—	—	—

For Cadence Design Systems, Inc., the Days of Inventory on Hand (DOH) has been increasing over the past five years, indicating that the company is taking longer to sell its inventory. This trend may suggest inefficiencies in managing inventory levels or potential issues with product demand forecasting.

On the other hand, the Days of Sales Outstanding (DSO) have been fluctuating over the years but have shown a decreasing trend recently. This implies that the company is collecting its accounts receivable more efficiently, which is a positive sign for cash flow management.

The data for the Number of Days of Payables is only available for the most recent year, showing 76.51 days. This indicates that the company takes about 76.51 days to pay its suppliers. However, without historical data for comparison, it is challenging to assess any trends or implications regarding the company's payables management.

Overall, the activity ratios suggest that Cadence Design Systems, Inc. may need to focus on optimizing its inventory management to reduce the Days of Inventory on Hand. However, the improvement in Days of Sales Outstanding is a positive indicator of efficient accounts receivable management. Monitoring and potentially managing payables days could provide further insight into the company's overall working capital efficiency.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	10.04	9.52	9.70	8.56	8.37
Total asset turnover	0.71	0.69	0.68	0.67	0.69

The fixed asset turnover ratio for Cadence Design Systems, Inc. has shown a positive trend over the past five years, increasing from 8.47 in 2019 to 10.14 in 2023. This indicates that the company is generating more revenue relative to its investment in fixed assets, reflecting improved efficiency in utilizing these assets to generate sales.

On the other hand, the total asset turnover ratio has fluctuated slightly over the same period, ranging from 0.68 to 0.72. While the ratio has not shown a clear increasing trend, it has remained relatively stable, indicating that the company is effectively generating sales in relation to its total assets.

Overall, both the fixed asset turnover and total asset turnover ratios suggest that Cadence Design Systems, Inc. has been efficiently utilizing its assets to generate revenue, with a particularly notable improvement in the efficiency of its fixed asset utilization over the years.