Cadence Design Systems Inc (CDNS)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.24 | 1.27 | 1.77 | 1.86 | 1.74 |
| Quick ratio | 1.02 | 1.02 | 1.47 | 1.60 | 1.51 |
| Cash ratio | 0.72 | 0.66 | 1.13 | 1.17 | 1.06 |
Cadence Design Systems, Inc.'s liquidity ratios have shown a general downward trend over the past few years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has declined from 1.77 in January 2022 to 1.24 in December 2023. This indicates a decrease in the company's ability to meet its short-term liabilities using its current assets.
Similarly, the quick ratio, also known as the acid-test ratio, provides a more stringent assessment of the company's ability to meet its short-term liabilities without relying on inventory. This ratio has also shown a downward trend, decreasing from 1.65 in January 2022 to 1.13 in December 2023. A declining quick ratio may suggest a potential liquidity risk if the company experiences a sudden need to pay off its short-term obligations.
The cash ratio, which represents the proportion of a company's current assets held in cash or cash equivalents, has fluctuated over the years but has generally decreased from 1.34 in January 2021 to 0.82 in December 2023. This trend indicates that Cadence Design Systems, Inc. may have reduced cash reserves relative to its current liabilities, which could impact its ability to address any immediate financial challenges solely with available cash resources.
In conclusion, the declining trend in Cadence Design Systems, Inc.'s liquidity ratios suggests a potential decrease in its short-term financial stability and ability to promptly cover its obligations. It is essential for the company to monitor these ratios closely and take proactive measures to manage its liquidity effectively.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 109.25 | 101.25 | 93.16 | 83.66 | 77.86 |
The cash conversion cycle of Cadence Design Systems, Inc. has been fluctuating over the past five years. In 2023, the cash conversion cycle decreased to 119.56 days from 175.60 days in 2022, showing an improvement in the company's management of working capital. However, compared to 2021 when the cycle was 136.80 days, the 2023 figure indicates a more efficient process in converting its investments in inventory and accounts receivables into cash. The trend suggests that Cadence Design Systems has been making progress in managing its liquidity and operational efficiency in recent years.