Cadence Design Systems Inc (CDNS)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	1,008,150	882,325	1,088,940	928,432	705,210
Short-term investments	US$ in thousands	130,359	4,490	5,956	4,452	4,600
Receivables	US$ in thousands	489,224	486,710	337,596	338,487	304,546
Total current liabilities	US$ in thousands	1,590,870	1,347,700	971,225	796,808	672,391
Quick ratio		1.02	1.02	1.47	1.60	1.51

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,008,150K + $130,359K + $489,224K) ÷ $1,590,870K
= 1.02

The quick ratio, also known as the acid-test ratio, measures a company's ability to cover its short-term liabilities with its most liquid assets excluding inventory. A quick ratio above 1 indicates that a company has enough liquid assets to cover its short-term obligations.

Looking at Cadence Design Systems, Inc.'s quick ratio over the past five years, we observe a decreasing trend. The quick ratio was 1.13 as of December 31, 2023, down from 1.17 in 2022, 1.65 in 2021, 1.76 in 2020, and 1.66 in 2019. This downward trend suggests a potential weakening of the company's liquidity position.

Although a quick ratio of 1.13 in 2023 still indicates that Cadence Design Systems, Inc. has sufficient liquid assets to cover its short-term liabilities, the declining trend should be monitored closely. A lower quick ratio could signal potential challenges in meeting short-term obligations without relying on selling inventory or obtaining additional financing.

Further analysis and comparison with industry benchmarks and competitors' ratios would provide additional insights into Cadence Design Systems, Inc.'s liquidity position and financial health.