Cadence Design Systems Inc (CDNS)

Quick ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cash	US$ in thousands	2,644,030	1,008,150	882,325	1,088,940	928,432
Short-term investments	US$ in thousands	140,625	130,359	4,490	5,956	4,452
Receivables	US$ in thousands	—	—	—	—	—
Total current liabilities	US$ in thousands	1,370,100	1,590,870	1,347,700	971,225	796,808
Quick ratio		2.03	0.72	0.66	1.13	1.17

December 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($2,644,030K + $140,625K + $—K) ÷ $1,370,100K
= 2.03

The quick ratio of Cadence Design Systems Inc has shown fluctuations over the years. As of December 31, 2020, the quick ratio was 1.17, indicating that the company had $1.17 of liquid assets to cover each dollar of current liabilities. This suggests a strong ability to meet short-term obligations without relying heavily on inventory.

However, there was a slight decline in the quick ratio to 1.13 as of December 31, 2021. This may indicate a slightly weaker liquidity position compared to the previous year, but the company still had adequate liquid assets to cover its short-term liabilities.

A more significant decrease was observed as of December 31, 2022, with the quick ratio falling to 0.66. This sharp decline suggests a potential liquidity strain, as the company may be less able to meet its short-term obligations using its liquid assets alone.

There was a slight improvement in the quick ratio to 0.72 as of December 31, 2023. While this indicates a slight recovery in liquidity compared to the previous year, the ratio still remains below 1, raising concerns about the company's ability to cover short-term liabilities without relying on other sources of funding.

A substantial increase in the quick ratio was seen as of December 31, 2024, reaching 2.03. This significant improvement suggests that Cadence Design Systems Inc had a strong liquidity position at the end of 2024, with much more than enough liquid assets to cover its current liabilities.

Overall, the analysis of Cadence Design Systems Inc's quick ratio indicates significant fluctuations in liquidity over the years, with periods of strength and weakness. It is important for the company to carefully manage its liquidity and ensure it has sufficient liquid assets to meet its short-term obligations in a sustainable manner.