Cadence Design Systems Inc (CDNS)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	446.01	152.41	125.72	137.58	90.75
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—
Cash conversion cycle	days	446.01	152.41	125.72	137.58	90.75

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 446.01 + — – —
= 446.01

Cadence Design Systems Inc experienced a fluctuating trend in its cash conversion cycle over the past years. The cash conversion cycle, a measure of the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, increased from 90.75 days as of December 31, 2020, to 137.58 days by December 31, 2021, indicating a slowed cash conversion process.

However, the cash conversion cycle slightly decreased to 125.72 days by December 31, 2022, suggesting an improvement in the company's efficiency in managing its working capital. There was a subsequent increase to 152.41 days by December 31, 2023, reflecting potentially longer payment terms or inventory holding periods.

The most significant jump occurred by December 31, 2024, with the cash conversion cycle soaring to 446.01 days, raising concerns about the company's liquidity position and operational effectiveness. This sharp increase may be indicative of challenges in managing inventory levels, collecting receivables, or paying liabilities promptly.

Overall, the varying trend in Cadence Design Systems Inc's cash conversion cycle highlights the importance of closely monitoring working capital management to ensure optimal efficiency and financial health.