Cadence Design Systems Inc (CDNS)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,471,820 | 1,273,890 | 1,068,300 | 785,415 | 653,497 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 4,673,580 | 3,404,270 | 2,745,110 | 2,740,680 | 2,493,020 |
| Return on total capital | 31.49% | 37.42% | 38.92% | 28.66% | 26.21% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,471,820K ÷ ($—K + $4,673,580K)
= 31.49%
Cadence Design Systems Inc's return on total capital has shown a positive trend over the five-year period from December 31, 2020, to December 31, 2024. The return on total capital increased from 26.21% in 2020 to 31.49% in 2024.
The company's return on total capital improved significantly from 2020 to 2022, increasing by approximately 12.71 percentage points over this period. This signifies a more efficient utilization of both equity and debt capital to generate profits.
However, there was a slight decrease in the return on total capital from 2022 to 2023, dropping from 38.92% to 37.42%. This may indicate some temporary challenges or adjustments in the company's operations during that period.
Overall, Cadence Design Systems Inc has demonstrated a generally strong performance in terms of generating returns from its total capital base over the five-year period, with a notable improvement in efficiency. It is essential for the company to sustain this positive trend and continue optimizing its capital allocation strategies to maximize returns for its shareholders.
Peer comparison
Dec 31, 2024