Financial statement analysis and common stock valuation

Analysis of Liquidity Ratios
Quarterly Data

Measures the adequacy of a Cadence Design Systems Inc. cash resources to meet its near-term cash obligations.

• Liquidity Ratios (Summary)
• Current Ratio
• Quick Ratio
• Cash Ratio

Common Stock Valuation Ratios
Quarterly Data

Relative valuation technique determine the value of Cadence Design Systems Inc. by comparing it to similar entities (like industry or sector) on the basis of several relative ratios that compare its stock price to relevant variables that affect the stock value, such as earnings, book value, and sales.

• Historical Valuation Ratios (Summary)
• Price to Earnings (P/E)
• Price to Operating Profit (P/OP)
• Price to Sales (P/S)
• Price to Book Value (P/BV)

Income Statement

The income statement (statement of earnings) reports on the performance of Cadence Design Systems Inc., the result of its operating activities.

Common-Size Balance Sheet: Assets
Quarterly Data

Assets components shown as percentage of total assets.

Enterprise Value to FCFF (EV/FCFF)

Free cash flow to the firm is the cash flow available to the Cadence Design Systems Inc. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to The Firm (FCFF)
• Interest Paid, Net of Tax
• EV to FCFF Ratio, Current
• EV to FCFF Ratio, Historical

Statement of Comprehensive Income

Comprehensive income is the change in equity (net assets) of Cadence Design Systems Inc. during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Analysis of Geographic Areas

Cadence Design Systems Inc. operates in 6 regions: United States; Other Americas; China; Other Asia; Europe, Middle East and Africa; and Japan.

• Area Asset Turnover
• Revenue
• Long-lived assets

Price to FCFE (P/FCFE)

Free cash flow to equity is the cash flow available to Cadence Design Systems Inc. equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made.

• Free Cash Flow to Equity (FCFE)
• P to FCFE Ratio, Current
• P to FCFE Ratio, Historical

Enterprise Value to EBITDA (EV/EBITDA)

To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital.

• Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
• EV to EBITDA Ratio, Current
• EV to EBITDA Ratio, Historical

Capital Asset Pricing Model (CAPM)

CAPM is a theory concentrated with deriving the expected rates of return on risky assets based on the assets’ systematic risk levels. Systematic risk is the variability of returns that is due to macroeconomic factors that affect all risky assets. It cannot be eliminated by diversification.

• Rates of Return
• Variance and Covariance
• Systematic Risk (β) Estimation
• Expected Rate of Return

Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
Quarterly Data

Liabilities and stockholders’ equity components shown as percentage of total liabilities and stockholders’ equity.

Analysis of Solvency Ratios
Quarterly Data

Examines Cadence Design Systems Inc. capital structure in terms of the mix of its financing sources and the ability of the firm to satisfy its longer-term debt and investment obligations.

• Solvency Ratios (Summary)
• Debt to Equity
• Debt to Capital
• Debt to Assets
• Financial Leverage
• Interest Coverage