Cadence Design Systems Inc (CDNS)

Activity ratios

Short-term

Turnover ratios

	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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	5.59	6.08	6.97	7.41	7.16	7.80	8.01	7.56	7.06	7.96	8.64	9.92	9.80	14.90	16.09	11.36	11.91	9.47	12.37	16.61
Receivables turnover	8.28	9.09	8.54	7.48	7.26	8.72	8.33	8.66	8.79	9.04	7.36	7.15	7.86	8.30	7.70	8.27	7.58	8.31	9.42	8.21
Payables turnover	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Working capital turnover	10.51	6.92	8.42	7.06	9.85	8.25	5.31	4.05	3.99	4.65	5.41	4.99	3.90	4.03	4.93	6.07	4.65	5.30	6.06	7.59

Cadence Design Systems, Inc.'s activity ratios provide insights into the company's efficiency in managing its assets and operations.

The inventory turnover ratio has shown a declining trend over the last eight quarters, from 3.04 in Q3 2022 to 2.39 in Q4 2023. This indicates that the company is selling its inventory at a slower pace. A lower inventory turnover may suggest issues with demand for products or excess inventory levels.

On the other hand, the receivables turnover ratio has been relatively stable, ranging between 7.32 and 9.19 over the same period. This implies that Cadence Design Systems is efficient in collecting payments from its customers within a reasonable timeframe.

The payables turnover data is missing for the quarters provided, making it difficult to assess the company's efficiency in managing its payables.

The working capital turnover ratio has shown fluctuation, with a general increasing trend over the quarters. This suggests that Cadence Design Systems is generating revenue more efficiently with its working capital, indicating improved operational efficiency and potentially better utilization of resources.

Overall, while the company may need to address declining inventory turnover, its ability to manage receivables efficiently and increase working capital turnover are positive signs for its operational effectiveness. The missing payables turnover data warrants further investigation to provide a more comprehensive analysis of the company's overall liquidity and operational performance.

Average number of days

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	65.33	59.99	52.37	49.28	51.00	46.77	45.57	48.26	51.73	45.84	42.27	36.79	37.25	24.49	22.69	32.13	30.66	38.55	29.50	21.97
Days of sales outstanding (DSO)	days	44.10	40.14	42.76	48.82	50.25	41.84	43.81	42.14	41.52	40.39	49.57	51.03	46.42	43.97	47.41	44.11	48.15	43.91	38.76	44.46
Number of days of payables	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—

Cadence Design Systems, Inc.'s activity ratios provide insight into the efficiency of the company's operations. The Days of Inventory on Hand (DOH) increased gradually over the past two years, indicating a longer period for the company to sell its inventory, which could potentially tie up capital. In Q4 2023, the DOH was 152.41 days, which was higher compared to the previous quarters, showing slower inventory turnover.

On the other hand, the Days of Sales Outstanding (DSO) fluctuated over the quarters but generally remained within a reasonable range. The DSO measures how long it takes for the company to collect revenue from its sales. In Q4 2023, the DSO was 43.66 days, suggesting that the company collects its accounts receivable in a relatively efficient manner.

There is no data available for the Number of Days of Payables in the 2023 quarters, which makes it challenging to determine the impact on the company's cash flow management. However, a shorter payment period to suppliers may indicate strong liquidity but could also lead to strained supplier relationships.

Overall, a careful evaluation of all three activity ratios is essential to understand Cadence Design Systems, Inc.'s management of inventory, receivables, and payables effectively and to identify potential areas for improvement in its working capital management.

Long-term

	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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	10.04	10.21	10.17	9.79	9.52	9.80	10.30	10.09	9.70	9.75	9.51	9.11	8.56	8.65	8.52	8.36	8.37	8.81	8.68	8.58
Total asset turnover	0.71	0.71	0.73	0.71	0.69	0.69	0.75	0.71	0.68	0.70	0.70	0.70	0.67	0.60	0.60	0.62	0.69	0.86	0.86	0.85

Cadence Design Systems, Inc. has demonstrated consistent efficiency in utilizing its fixed assets to generate revenue as indicated by the fixed asset turnover ratio. The company's fixed asset turnover ratio has remained relatively stable over the past quarters, ranging between 9.59 and 10.33. This suggests that Cadence Design Systems is effectively using its fixed assets to generate sales revenue, with a higher ratio indicating better efficiency in generating revenue.

In terms of total asset turnover, Cadence Design Systems has shown moderate efficiency in utilizing all assets to generate revenue. The total asset turnover ratio has ranged from 0.69 to 0.75 over the past quarters. While the ratios are relatively consistent with some fluctuations, they indicate that the company is able to generate revenue in relation to its total assets. A higher total asset turnover ratio generally suggests better efficiency in asset utilization and revenue generation.

Overall, the long-term activity ratios for Cadence Design Systems, Inc. reflect efficient utilization of both fixed assets and total assets to generate revenue. The stability in the fixed asset turnover ratio and the moderate efficiency in the total asset turnover ratio paint a picture of a company effectively leveraging its assets to drive sales.