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.
Peer comparison
Dec 31, 2023