Cadence Design Systems Inc (CDNS)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Cost of revenue (ttm)	US$ in thousands	392,734	439,103	495,233	446,136	440,004	424,408	402,427	398,252	371,628	347,806	336,808	320,860	306,973	310,816	316,498	314,996	305,498	305,290	283,981	270,235
Inventory	US$ in thousands	257,711	293,350	171,508	185,784	181,661	163,693	139,576	127,566	128,005	114,283	106,372	110,213	115,721	101,575	90,479	76,592	75,956	47,979	43,924	60,575
Inventory turnover		1.52	1.50	2.89	2.40	2.42	2.59	2.88	3.12	2.90	3.04	3.17	2.91	2.65	3.06	3.50	4.11	4.02	6.36	6.47	4.46

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $392,734K ÷ $257,711K
= 1.52

Cadence Design Systems Inc's inventory turnover has been fluctuating over the past few years. The ratio was 4.46 as of March 31, 2020, increased to 6.47 by June 30, 2020, and remained relatively stable around the 6 to 4 range until December 31, 2021. From March 31, 2021, the inventory turnover started to decline, reaching 2.40 by March 31, 2024. This indicates that the company is taking longer to sell its inventory.

A low inventory turnover ratio may suggest overstocking or obsolete inventory issues, which could lead to increased holding costs and potential inventory writedowns. It could also indicate declining sales or inefficiencies in inventory management. Cadence Design Systems Inc should focus on optimizing its inventory levels and improving inventory management to enhance its overall operational efficiency and profitability.