Cadence Design Systems Inc (CDNS)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 95.46% | 89.36% | 89.57% | 89.73% | 88.61% |
| Operating profit margin | 29.10% | 30.59% | 30.15% | 26.07% | 24.06% |
| Pretax margin | 30.07% | 31.34% | 29.35% | 25.72% | 23.58% |
| Net profit margin | 22.74% | 25.46% | 23.84% | 23.29% | 22.02% |
Cadence Design Systems Inc has shown a consistent improvement in its profitability ratios over the past five years. The company's Gross Profit Margin has steadily increased from 88.61% in December 31, 2020, to 95.46% in December 31, 2024, indicating a strong ability to generate profits from its core operations.
Similarly, the Operating Profit Margin has shown a positive trend, rising from 24.06% in December 31, 2020, to 29.10% in December 31, 2024. This demonstrates Cadence's efficient management of its operating expenses and ability to generate profits before interest and taxes.
Furthermore, the Pretax Margin has consistently improved from 23.58% in December 31, 2020, to 30.07% in December 31, 2024. This indicates the company's effective management of its tax liabilities and operating expenses.
However, the Net Profit Margin saw a slight decline in 2024, dropping to 22.74% from 25.46% in 2023. This may suggest some challenges in maintaining profitability at the bottom line, possibly due to increased costs or other factors impacting net income.
In conclusion, Cadence Design Systems Inc has demonstrated overall strong profitability performance over the past five years, as evidenced by its improved Gross Profit Margin, Operating Profit Margin, and Pretax Margin. The slight dip in Net Profit Margin in 2024 may warrant further investigation to understand the factors behind this decline and ensure continued profitability in the future.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 15.05% | 22.07% | 20.90% | 17.76% | 16.34% |
| Return on assets (ROA) | 11.76% | 18.36% | 16.53% | 15.87% | 14.95% |
| Return on total capital | 31.49% | 37.42% | 38.92% | 28.66% | 26.21% |
| Return on equity (ROE) | 22.58% | 30.58% | 30.93% | 25.39% | 23.69% |
Cadence Design Systems Inc has shown consistent improvement in its profitability ratios over the years.
- Operating return on assets (Operating ROA) has increased from 16.34% in 2020 to 22.07% in 2023, showing strong operational efficiency in generating profits from its assets. The dip to 15.05% in 2024 may warrant further investigation.
- Return on assets (ROA) has also displayed a positive trend, rising from 14.95% in 2020 to 18.36% in 2023, indicating the company's ability to generate more profits from its total assets. However, the decrease to 11.76% in 2024 is a notable decline.
- Return on total capital has seen substantial growth, from 26.21% in 2020 to 38.92% in 2022, showcasing the company's effective utilization of both debt and equity to generate returns. While there was a slight drop to 31.49% in 2024, the overall trend is positive.
- Return on equity (ROE) has demonstrated a consistent increase from 23.69% in 2020 to 30.58% in 2023, indicating improved profitability for the company's shareholders. The decrease to 22.58% in 2024 may require further analysis to understand the drivers behind this decline.
Overall, Cadence Design Systems Inc's profitability ratios show a generally positive trajectory, with some fluctuations in 2024 that may warrant closer scrutiny to identify any potential underlying issues.