Analysis of Investments
Paying user area
Try for free
Cadence Design Systems Inc. pages available for free this week:
- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Cadence Design Systems Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Cadence Design Systems Inc., adjustment to net income
US$ in thousands
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net income (as reported) | ||||||
| Add: Unrealized gains (losses) on investments | ||||||
| Net income (adjusted) |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
Reported net income demonstrates a consistent upward trend over the five-year period, increasing from US$695,955 thousand in 2021 to US$1,108,888 thousand in 2025. Adjusted net income also exhibits an increasing trend, mirroring the movement of reported net income. However, the difference between the two figures indicates adjustments related to mark-to-market changes in available-for-sale securities.
- Trend in Adjustments
- The adjustments to net income, representing mark-to-market gains or losses on available-for-sale securities, are relatively small in comparison to the overall net income. In 2021 and 2022, there were no adjustments. A positive adjustment of US$132 thousand was recorded in 2023, suggesting realized gains on these securities. A slight negative adjustment of US$484 thousand occurred in 2024, indicating a minor unrealized loss. The adjustment increased to a positive US$1,005 thousand in 2025, again pointing to realized gains.
The magnitude of these adjustments remains consistently low throughout the period, suggesting that available-for-sale securities do not represent a substantial portion of the company’s overall financial position or that the company effectively manages the associated risks. The fluctuations between small gains and losses appear to be immaterial to the overall profitability picture.
- Impact on Net Income
- The adjustments have a minimal impact on the reported net income. The difference between reported and adjusted net income is consistently less than 0.2% of reported net income in any given year. This indicates that the mark-to-market valuation of available-for-sale securities does not significantly alter the overall financial performance as reflected in net income.
Overall, the company demonstrates consistent profitability growth, and adjustments related to available-for-sale securities have a negligible effect on the reported financial results.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Cadence Design Systems Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The reported and adjusted profitability ratios demonstrate consistent trends between 2021 and 2025. Initially, performance metrics increased before declining in the latter years of the period. The adjustments made to these ratios appear to have a negligible impact on the observed trends, suggesting the mark-to-market valuation of available-for-sale securities does not materially alter the overall profitability picture.
- Net Profit Margin
- Both the reported and adjusted net profit margins exhibited an increase from 23.29% in 2021 to 25.46% in 2023. Following this peak, a decline is observed, with margins decreasing to 20.94% and 20.95% respectively, by 2025. The consistency between reported and adjusted values indicates that adjustments related to available-for-sale securities do not significantly affect net profit margin calculations.
- Return on Equity (ROE)
- Similar to the net profit margin, ROE increased from 25.39% in 2021 to a high of 30.93% in 2022 and remained relatively stable at 30.58% in 2023. A subsequent decrease is evident, with ROE falling to 22.58% in 2024 and further to 20.26% and 20.28% in 2025 for reported and adjusted values, respectively. The minimal difference between reported and adjusted ROE suggests limited impact from mark-to-market adjustments.
- Return on Assets (ROA)
- ROA followed a comparable pattern, rising from 15.87% in 2021 to 18.36% in 2023. A notable decline then occurred, with ROA decreasing to 11.76% in 2024 and continuing to 10.92% and 10.93% in 2025 for reported and adjusted values. The consistency between reported and adjusted ROA reinforces the observation that adjustments for available-for-sale securities have a minimal effect on this metric.
- Overall Trend
- The period between 2021 and 2023 demonstrates a positive trend in profitability, as indicated by increasing net profit margin, ROE, and ROA. However, a clear downward trend emerges from 2023 to 2025 across all three ratios. This suggests a potential shift in underlying business conditions or operational efficiency during this timeframe. The negligible difference between reported and adjusted values across all ratios consistently indicates that the mark-to-market adjustments of available-for-sale securities do not materially impact the observed profitability trends.
Cadence Design Systems Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × ÷ =
The reported and adjusted net income figures demonstrate a consistent upward trajectory between 2021 and 2025. However, the associated net profit margins exhibit a more nuanced pattern. While initially increasing, these margins experienced a decline in the later years of the observed period.
- Reported Net Profit Margin
- The reported net profit margin increased from 23.29% in 2021 to 25.46% in 2023, indicating improved profitability relative to revenue during this period. Subsequently, a downward trend is observed, with the margin decreasing to 22.74% in 2024 and further to 20.94% in 2025. This suggests that while net income continued to rise, revenue growth outpaced it, leading to a compression of the profit margin.
- Adjusted Net Profit Margin
- The adjusted net profit margin mirrors the trend of the reported net profit margin closely. It rose from 23.29% in 2021 to 25.46% in 2023, then decreased to 22.73% in 2024 and 20.95% in 2025. The consistency between the reported and adjusted figures suggests that adjustments made to net income did not significantly alter the overall profitability picture. The decline from 2023 to 2025 indicates increasing costs or decreasing pricing power.
- Relationship between Net Income and Net Profit Margin
- Despite the declining net profit margins in 2024 and 2025, net income continued to increase year-over-year. This implies substantial revenue growth during those years, which offset the margin compression. Further investigation into revenue drivers and cost structures would be necessary to understand the underlying causes of the margin decline and assess its sustainability.
In summary, the period under review shows strong growth in net income, but a concerning trend of decreasing net profit margins towards the end of the period. This warrants further scrutiny to determine the factors contributing to the margin decline and their potential impact on future profitability.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × ÷ =
The reported and adjusted net income figures demonstrate a consistent upward trajectory from 2021 through 2025. However, the return on equity (ROE), both reported and adjusted, exhibits a different pattern, peaking in 2022 and subsequently declining through 2025.
- Net Income Trend
- Net income increased steadily over the five-year period, moving from US$695,955 thousand in 2021 to US$1,108,888 thousand in 2025. The adjusted net income mirrors this trend, with only minor differences in the reported values.
- Reported ROE Analysis
- Reported ROE reached its highest point in 2022 at 30.93%. Following this peak, a downward trend is observed, with ROE decreasing to 22.58% in 2024 and further declining to 20.26% in 2025. This suggests that while net income is increasing, the equity base is growing at a faster rate, or that asset utilization is decreasing, resulting in a lower return relative to equity.
- Adjusted ROE Analysis
- The adjusted ROE mirrors the trend of the reported ROE closely. It peaked at 30.93% in 2022 and then decreased to 22.57% in 2024 and 20.28% in 2025. The consistency between reported and adjusted ROE indicates that adjustments to net income have a minimal impact on the overall ROE trend.
- ROE and Net Income Relationship
- Despite the consistent growth in net income, the declining ROE suggests a potential shift in the company’s capital structure or operational efficiency. Further investigation is warranted to determine the underlying factors contributing to this divergence, such as changes in asset turnover or financial leverage. The increasing net income is not translating into proportionally higher returns for shareholders.
In summary, while profitability, as measured by net income, is improving, the efficiency with which equity is used to generate profits is decreasing, as evidenced by the declining ROE.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
2025 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
The reported and adjusted net income figures demonstrate a consistent upward trajectory from 2021 through 2025. However, the return on assets (ROA), both reported and adjusted, exhibits a different pattern, initially increasing then declining over the observed period.
- Net Income Trend
- Net income, both as reported and adjusted, increased steadily from US$695,955 thousand in 2021 to US$1,108,888 thousand in 2025. The adjusted net income is nearly identical to the reported net income across all years, indicating minimal adjustments were made.
- Return on Assets (ROA) Trend
- Both reported and adjusted ROA values increased from 15.87% in 2021 to 18.36%/18.37% in 2023. A subsequent decline is observed in both metrics, falling to 11.76% in 2024 and further to 10.92%/10.93% in 2025. The adjusted and reported ROA values are consistently very close, differing by only 0.01% in 2023 and 2025.
The divergence between net income and ROA trends suggests that while profitability is increasing in absolute terms, the efficiency with which assets are being used to generate those profits is decreasing. This could be due to an increase in asset holdings without a proportional increase in net income, or a shift in the composition of assets towards less profitable categories. Further investigation into the asset base is warranted to understand the drivers behind this ROA decline.
- ROA Discrepancy
- The minimal difference between reported and adjusted ROA suggests that adjustments to net income have a negligible impact on the ROA calculation. This implies that the observed ROA trend is primarily driven by changes in the asset base rather than accounting adjustments.
The decline in ROA from 2023 to 2025, despite continued growth in net income, warrants further scrutiny. A detailed analysis of the company’s asset turnover and profit margin would provide additional insights into the underlying causes of this trend.