Cadence Design Systems Inc (CDNS)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	4,048,310	3,534,360	2,967,550	2,661,760	2,308,580
Total current assets	US$ in thousands	1,976,220	1,706,770	1,715,770	1,478,590	1,169,340
Total current liabilities	US$ in thousands	1,590,870	1,347,700	971,225	796,808	672,391
Working capital turnover		10.51	9.84	3.99	3.90	4.65

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $4,048,310K ÷ ($1,976,220K – $1,590,870K)
= 10.51

Cadence Design Systems, Inc. has demonstrated a consistent improvement in its working capital turnover over the past five years. The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue.

In 2023, Cadence Design Systems achieved a working capital turnover ratio of 10.61, indicating that the company generated $10.61 in revenue for every dollar of working capital invested. This represents an increase from the previous year, where the ratio was 9.92.

Comparing the latest ratio to the ratios from 2021 and 2020, it is evident that Cadence Design Systems has significantly improved its efficiency in utilizing its working capital. The ratio has more than doubled since 2021, where it was at 4.01, and has shown a steady upward trend since then.

This improvement in working capital turnover suggests that Cadence Design Systems has been able to effectively manage its working capital resources to support its business operations and increase its revenue generation. It indicates a positive sign of operational efficiency and effective financial management within the company.