Analysis of Property, Plant and Equipment
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Cadence Design Systems Inc., balance sheet: property, plant and equipment
US$ in thousands
Based on: 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), 10-K (reporting date: 2020-12-31).
- Equipment and internal-use software
- The value shows a consistent upward trend over the five-year period, increasing from $655,568 thousand in 2020 to $875,399 thousand in 2024. This steady growth suggests ongoing investment in equipment and software assets, reflecting a strategic focus on technological infrastructure.
- Buildings
- Building values remained relatively stable, with minor fluctuations around $126,000 to $138,000 thousand between 2020 and 2024. The slight increase indicates limited new investment or expansion in physical building assets during this period.
- Land
- Land asset values also showed marginal growth, rising gradually from $55,848 thousand in 2020 to $57,687 thousand in 2024. This indicates a stable land holding with minimal acquisitions or disposals.
- Leasehold, building and land improvements
- This category experienced significant growth, increasing from $129,155 thousand in 2020 to $245,669 thousand in 2024, nearly doubling over the five years. The sharp increase signals substantial investments in leasehold improvements and enhancements to existing buildings and land.
- Furniture and fixtures
- Values rose steadily from $27,064 thousand to $43,517 thousand between 2020 and 2024, indicating continual additions to office and facility furnishings and related equipment.
- In-process capital assets
- In-process capital assets showed variability; initial growth from $10,774 thousand in 2020 to a peak of $21,670 thousand in 2022 was followed by declines to $14,879 thousand in 2024. This suggests a fluctuating level of capital projects or assets under development during the timeframe.
- Property, plant and equipment, cost
- The total cost basis of property, plant, and equipment increased steadily from $1,005,075 thousand in 2020 to $1,374,932 thousand in 2024. This reflects overall asset growth and increasing investment in fixed assets over time.
- Accumulated depreciation and amortization
- Accumulated depreciation and amortization increased consistently in magnitude (more negative), from -$693,950 thousand in 2020 to -$916,732 thousand in 2024. This indicates a rising recognition of depreciation expense, aligned with growing asset bases and the aging of existing assets.
- Property, plant and equipment, net
- The net property, plant, and equipment values initially dipped slightly from $311,125 thousand in 2020 to $305,911 thousand in 2021, then showed steady increases through 2024, reaching $458,200 thousand. This overall net increase highlights successful asset accumulation and capital investments exceeding depreciation impact, strengthening the asset base.
Asset Age Ratios (Summary)
Cadence Design Systems Inc., asset age ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
- Average age ratio
- The average age ratio shows a gradual decline over the analyzed period, starting at 73.11% in 2020 and decreasing to 69.59% by 2024. This trend indicates a modest reduction in the relative age of the property, plant, and equipment assets over time, suggesting either an increase in newer asset acquisitions or a slower aging process of existing assets.
- Estimated total useful life
- The estimated total useful life of the assets remained stable at 14 years for the first two years (2020 and 2021). It then increased to 16 years in 2022 before decreasing back to 15 in 2023 and returning to 14 years in 2024. This fluctuation could reflect adjustments in asset lifespan assumptions, possibly due to updates in asset valuation methods or changes in asset composition over time.
- Estimated age, time elapsed since purchase
- The estimated age of the assets remained consistent around 10 to 11 years from 2020 through 2023, indicating that the assets in use have a relatively stable acquisition timeline without significant renewal during those years. However, in 2024, the estimated age notably decreases to 9 years, suggesting that more recent assets were added to the portfolio, likely through acquisitions or replacements of older equipment.
- Estimated remaining life
- The estimated remaining life of the assets has been relatively steady, ranging from 4 to 5 years throughout the period. After two years at 4 years of remaining life, it increased to 5 years in 2022 and then reverted to 4 years in subsequent years. This pattern corresponds somewhat inversely with the total useful life estimates and may indicate periodic reassessments aimed at reflecting the current condition and expected usability of the assets.
Average Age
Based on: 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), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property, plant and equipment, cost – Land)
= 100 × ÷ ( – ) =
- Property, Plant and Equipment Cost
- The cost of property, plant, and equipment has shown a continuous upward trend over the period analyzed. Starting at approximately 1,005,075 thousand US dollars in 2020, it increased steadily each year, reaching 1,374,932 thousand US dollars by the end of 2024. This indicates a consistent investment in fixed assets or acquisitions over the five-year period.
- Accumulated Depreciation and Amortization
- Accumulated depreciation and amortization have also increased each year, rising from 693,950 thousand US dollars in 2020 to 916,732 thousand US dollars in 2024. This reflects the ongoing consumption and wear of the assets on the balance sheet, in line with the increasing value of the property, plant, and equipment cost.
- Land
- The value attributed to land has remained relatively stable, with a slight increase from 55,848 thousand US dollars in 2020 to 57,687 thousand US dollars in 2024. The minimal change suggests limited acquisition or disposal of land assets during this period.
- Average Age Ratio
- The average age ratio, expressed in percentage terms, has demonstrated a gradual decline from 73.11% in 2020 to 69.59% in 2024. This decrease implies that the overall fixed asset base is becoming relatively newer, which may be due to ongoing investments in new assets or replacement of older equipment.
- Overall Insights
- There is a clear pattern of investment in fixed assets, as evidenced by the steady increase in the cost of property, plant, and equipment. The concurrent rise in accumulated depreciation aligns with asset utilization over time. Stability in the value of land suggests focus on other asset categories. The declining average age ratio points to fleet modernization or asset renewal, which may enhance operational efficiency and reduce maintenance costs in the long term.
Estimated Total Useful Life
Based on: 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), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Estimated total useful life = (Property, plant and equipment, cost – Land) ÷ Depreciation and amortization expense for property, plant and equipment
= ( – ) ÷ =
- Property, Plant, and Equipment Cost
- The cost of property, plant, and equipment (PP&E) shows a steady upward trend from 1,005,075 thousand US dollars in 2020 to 1,374,932 thousand US dollars in 2024. This represents a cumulative increase of approximately 36.7% over the five-year period, indicating ongoing investment and expansion in tangible assets.
- Land
- The value of land remains relatively stable across the years with minor incremental changes. Starting at 55,848 thousand US dollars in 2020, the value increases slightly to 57,687 thousand US dollars by 2024. The minimal growth suggests limited land acquisitions or revaluations.
- Depreciation and Amortization Expense for Property, Plant, and Equipment
- The depreciation and amortization expense exhibits some fluctuations, beginning at 67,600 thousand US dollars in 2020, increasing marginally in 2021, then decreasing in 2022, followed by significant rises in 2023 and reaching 96,900 thousand US dollars in 2024. The rapid increase during the last two years could reflect the capital expenditure growth or changes in asset depreciation schedules.
- Estimated Total Useful Life
- The estimated total useful life of PP&E assets shows slight variation, initially at 14 years in 2020 and 2021, increasing to 16 years in 2022, followed by a reduction back to 15 years in 2023 and finally to 14 years in 2024. These changes may be associated with adjustments to asset lifespan assumptions, asset mix changes, or updated depreciation policies.
- Summary
- Overall, the data reveals a consistent increase in the cost base of property, plant, and equipment, indicative of active investment in fixed assets. The corresponding rise in depreciation expense, especially in recent years, aligns with the expanded asset base and possible acceleration in depreciation. The relatively constant land values suggest a stable position in land holdings, while the adjustments in estimated useful life reflect potential changes in asset management or accounting estimates. The combined trends imply strategic asset growth with evolving depreciation considerations over the analyzed period.
Estimated Age, Time Elapsed since Purchase
Based on: 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), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation and amortization expense for property, plant and equipment
= ÷ =
- Accumulated Depreciation and Amortization
- The accumulated depreciation and amortization shows a consistent upward trend over the observed periods. The value increased from approximately $694 million in 2020 to about $917 million in 2024. This steady growth suggests ongoing wear and usage of property, plant, and equipment assets, reflecting a continuous allocation of cost over their useful lives.
- Depreciation and Amortization Expense for Property, Plant, and Equipment
- The annual depreciation and amortization expense fluctuates somewhat but generally increases over the five-year span. Starting at roughly $67.6 million in 2020, it rose to about $71.2 million in 2021, dipped slightly to $69.1 million in 2022, then increased again to $78.4 million in 2023 and further to $96.9 million in 2024. The overall increase, especially the significant rise in the last two years, may indicate higher capital expenditures or acceleration in asset usage/depreciation methods.
- Time Elapsed Since Purchase
- The average time elapsed since the purchase of property, plant, and equipment remains mostly stable around 10 to 11 years from 2020 to 2023, with a slight decrease to 9 years in 2024. This reduction could imply the acquisition of newer assets, thereby lowering the average age and potentially affecting depreciation expense patterns.
Estimated Remaining Life
Based on: 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), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation and amortization expense for property, plant and equipment
= ( – ) ÷ =
- Property, Plant, and Equipment, Net
-
The net value of property, plant, and equipment exhibits a fluctuating upward trend over the analyzed periods. Starting at $311,125 thousand at the end of 2020, the value slightly declined in 2021 to $305,911 thousand. Subsequently, the net value increased considerably, reaching $371,451 thousand by the end of 2022 and continued to grow to $403,213 thousand in 2023, ultimately peaking at $458,200 thousand at the end of 2024. This trend indicates ongoing investments and capital expenditures in property, plant, and equipment, likely reflecting expansion or modernization efforts.
- Land
-
Land holdings remain relatively stable across the years, with marginal incremental increases. Starting from $55,848 thousand in 2020, the value slightly decreased by 6 thousand in 2021 to $55,842 thousand but resumed a slow upward trajectory thereafter. The values recorded were $56,611 thousand in 2022, $56,641 thousand in 2023, and $57,687 thousand in 2024. This stability suggests no significant acquisitions or disposals of land assets within this timeframe.
- Depreciation and Amortization Expense for Property, Plant and Equipment
-
Depreciation and amortization expenses exhibited moderate fluctuations with an overall increasing trend. The expense was $67,600 thousand at the end of 2020 and rose slightly to $71,200 thousand in 2021. Thereafter, a small decline is noted in 2022 where expenses decreased to $69,100 thousand. However, subsequent years showed a notable rise, reaching $78,400 thousand in 2023 and a significant increase to $96,900 thousand by the end of 2024. This pattern may reflect increased asset depreciation stemming from new capital investments and aging of existing assets.
- Estimated Remaining Life
-
The estimated remaining life of assets was reported consistently at 4 years for most periods, with a singular increase to 5 years at the end of 2022. This small fluctuation suggests an adjustment period when asset lifespans were re-evaluated, possibly correlating with the acquisition of assets with longer useful lives or revised depreciation policies. However, it returned to 4 years subsequently, indicating a stabilization in asset life estimation.