Cadence Design Systems Inc. (NASDAQ:CDNS)

Total Asset Turnover

The reported total asset turnover remained relatively stable from 2020 to 2023, fluctuating slightly between 0.68 and 0.72, before experiencing a notable decline to 0.52 in 2024. The adjusted total asset turnover follows a similar pattern, staying around 0.85–0.87 through 2020 to 2023, then decreasing significantly to 0.59 in 2024. This indicates a decrease in the efficiency of asset utilization in the most recent year.

Current Ratio

The reported current ratio showed a declining trend from 1.86 in 2020 to 1.24 in 2023, suggesting gradually decreasing short-term liquidity during this period. However, in 2024, there was a substantial increase to 2.93, indicating improved liquidity. The adjusted current ratio exhibits a similar downward trend from 4.23 in 2020 to 2.14 in 2023, followed by a sharp rise to 6.36 in 2024, reinforcing the observation of strengthened liquidity by the end of the period.

Debt to Equity Ratio

The reported debt to equity ratio fluctuated between 0.13 and 0.27 from 2020 to 2023 but increased significantly to 0.53 in 2024, indicating a higher reliance on debt financing relative to equity. The adjusted ratio shows a consistent trend, rising from 0.18 in 2020 to 0.57 in 2024. This upward movement reflects an increased financial leverage and potential changes in the company's capital structure.

Debt to Capital Ratio

The reported debt to capital ratio remained relatively low and stable from 2020 to 2023, with values ranging from 0.11 to 0.21, then nearly doubled to 0.35 in 2024. The adjusted values show a similar pattern, increasing from 0.15 to 0.36 over the five-year period. This suggests a growing proportion of debt within total capital in the latest year.

Financial Leverage

The reported financial leverage ratio trended upward overall, from 1.58 in 2020 to 1.92 in 2024, despite a dip in 2023. Adjusted financial leverage follows this progression more smoothly, increasing from 1.38 to 1.74. This confirms an increasing use of borrowed funds relative to equity, affecting the company's risk profile.

Net Profit Margin

The reported net profit margin improved from 22.02% in 2020 to a peak of 25.46% in 2023, then declined to 22.74% in 2024. The adjusted net profit margin decreased more markedly, from 25.29% in 2020 to 19.52% in 2024, with fluctuations between these years. This indicates some pressure on profitability margins, particularly when considering adjustments made.

Return on Equity (ROE)

The reported ROE increased steadily from 23.69% in 2020 to 30.93% in 2022, and then slightly decreased to 22.58% in 2024. Adjusted ROE similarly rose early in the period and declined to 20.13% in 2024. The trend suggests an overall strengthening of shareholder returns through the mid-period, followed by a drop in the most recent year.

Return on Assets (ROA)

The reported ROA improved from 14.95% in 2020 to 18.36% in 2023 before falling sharply to 11.76% in 2024. Adjusted ROA trends downward more gradually, from 22.04% in 2020 to 11.54% in 2024. These trends mirror the earlier observations in asset turnover and profit margins, indicating reduced efficiency in asset utilization and profitability towards the end of the analysis period.

The financial data indicates a consistent upward trend in revenue over the five-year period, increasing from approximately 2.68 billion US dollars in 2020 to 4.64 billion in 2024. This growth is mirrored in the adjusted revenue figures, which also demonstrate an increase from about 2.81 billion to 4.73 billion US dollars during the same period.

Total assets have exhibited significant growth, rising from roughly 3.95 billion US dollars at the end of 2020 to 8.97 billion in 2024. The adjusted total assets show a similar pattern, increasing from approximately 3.22 billion to 7.99 billion US dollars over these years. The asset base expansion is particularly notable between 2023 and 2024, where there is a pronounced jump in both reported and adjusted total assets.

The reported total asset turnover ratio remained relatively stable from 2020 to 2023, fluctuating slightly around the 0.68 to 0.72 range. However, in 2024, there is a marked decline to 0.52, indicating that the company generated less revenue per dollar of assets compared to previous years. A similar trend is evident in the adjusted total asset turnover ratio, which stayed fairly consistent around 0.85 to 0.87 from 2020 to 2023 before dropping sharply to 0.59 in 2024.

Revenue Growth

Sustained increase in both reported and adjusted revenue, reflecting strong top-line expansion over five years.

Asset Expansion

Substantial growth in total and adjusted assets, with an accelerated increase in the final year, suggesting major investments or acquisitions.

Asset Efficiency

Relatively stable asset turnover ratios for the initial four years, followed by a significant decline in 2024, implying reduced efficiency in asset utilization to generate revenue.

Overall Implications

The company has significantly expanded its asset base and revenue, but the sharp decrease in asset turnover ratios in 2024 signals potential challenges in managing or leveraging the larger asset portfolio effectively. This may warrant closer examination of the nature of the asset increase and the corresponding impact on operational efficiency.

Current Assets

The current assets exhibit a generally increasing trend over the five-year period, starting from approximately 1,478 million US dollars at the end of 2020 and reaching over 4,016 million US dollars by the end of 2024. The increase is particularly pronounced between 2023 and 2024, indicating a significant growth in liquid or near-liquid assets.

Current Liabilities

Current liabilities increased from 797 million US dollars at the end of 2020 to a peak of roughly 1,591 million US dollars in 2023, followed by a notable decrease to 1,370 million US dollars in 2024. This fluctuation suggests some effort in managing short-term obligations, especially marked by the fall in 2024.

Reported Current Ratio

The reported current ratio starts at 1.86 in 2020 and decreases gradually through 2022 and 2023, reaching a low of 1.24. However, in 2024, there is a sharp increase to 2.93. This indicates an improvement in liquidity position in the most recent year after a period of decline.

Adjusted Current Assets

Adjusted current assets closely mirror the trend of reported current assets, increasing from approximately 1,481 million US dollars in 2020 to about 4,022 million US dollars in 2024. This adjustment likely accounts for refinements in asset valuation or classifications, showing consistent growth with a significant jump between 2023 and 2024.

Adjusted Current Liabilities

The adjusted current liabilities start considerably lower than the reported figures in 2020 at around 350 million US dollars but show a steady rise, peaking at approximately 926 million US dollars in 2023. Subsequently, there is a decline to 633 million US dollars in 2024. This suggests adjustments that highlight a more conservative view of liabilities and a recent reduction in short-term obligations.

Adjusted Current Ratio

The adjusted current ratio is markedly higher than the reported ratio in all years, beginning at 4.23 in 2020 and gradually decreasing to 2.14 in 2023 before sharply increasing to 6.36 in 2024. The consistent higher ratio indicates a stronger liquidity position when adjustments are considered, with a notable improvement in the latest year, reflecting enhanced financial flexibility.

The analysis of the financial data over the five-year period reveals several important trends related to Cadence Design Systems Inc.'s debt levels and equity position. Both total debt and stockholders' equity have shown significant changes, which have influenced the company's leverage ratios.

Total debt

The total debt experienced a moderate increase from 2020 (approximately 346.8 million USD) to 2021 (347.6 million USD), followed by a substantial rise in 2022 (748.1 million USD). There was a decrease in total debt in 2023 (649.1 million USD), but 2024 saw a sharp escalation to about 2.48 billion USD, marking a pronounced increase in the company's debt obligations.

Stockholders' equity

Stockholders' equity demonstrated a steady upward trend across the entire timeframe. Starting at approximately 2.49 billion USD in 2020, equity increased consistently each year to reach 4.67 billion USD in 2024. This steady growth suggests sustained capital accumulation or retained earnings over the period.

Reported debt to equity ratio

The reported debt to equity ratio remained relatively low and stable from 2020 to 2021, at 0.14 and 0.13 respectively, indicating low leverage. However, the ratio nearly doubled in 2022, rising to 0.27, before declining somewhat to 0.19 in 2023. In 2024, the ratio sharply increased to 0.53, indicating a significant rise in leverage relative to equity.

Adjusted total debt

The adjusted total debt values follow a similar pattern to the reported total debt but at generally higher levels. Starting from about 494.6 million USD in 2020, it slightly decreased in 2021, then increased markedly to 924.2 million USD in 2022. In 2023, there was a decrease to about 806.0 million USD, followed by a significant rise to approximately 2.63 billion USD in 2024.

Adjusted stockholders' equity

The adjusted stockholders' equity indicates a similar upward trajectory, beginning at 2.33 billion USD in 2020 and increasing every year to nearly 4.58 billion USD by 2024. This growth supports the trend observed in the reported equity figures.

Adjusted debt to equity ratio

Adjusted debt to equity ratios have generally been higher than the reported ratios but have followed a comparable trend. Starting at 0.21 in 2020, it decreased slightly in 2021 to 0.18, surged to 0.34 in 2022, dropped to 0.24 in 2023, and then increased again markedly to 0.57 in 2024. This indicates that the company's leverage, when viewed in adjusted terms, increased substantially in the most recent year.

Overall, the data suggest that the company has experienced a consistent growth in equity alongside fluctuating debt levels, with a notable surge in total and adjusted debt in 2024. This has resulted in a considerable increase in leverage as measured by both reported and adjusted debt to equity ratios. The trends indicate a strategic shift towards higher debt financing in the latest period, which could reflect increased investment or expansion activities. Continuous monitoring of debt levels relative to equity will be important to assess financial risk going forward.

The financial data reveals several notable trends in the company's debt and capital structure over the five-year period under review.

Total debt and capital

Total debt remained relatively stable in 2020 and 2021, with values around $346 million to $347 million thousand dollars. However, there was a significant increase in total debt in 2022 to approximately $748 million and a subsequent fluctuation in 2023 to about $649 million. The year 2024 saw a dramatic surge in total debt, rising sharply to about $2.48 billion, indicating increased borrowing or liabilities.

Total capital showed a consistent upward trend throughout the same period, increasing steadily from roughly $2.84 billion in 2020 to approximately $7.15 billion by the end of 2024. This reflects an expansion in the company's capital base over the years.

Debt to capital ratios (reported)

The reported debt to capital ratio was low in 2020 and 2021, around 11-12%, suggesting a conservative leverage position. This ratio increased notably to 21% in 2022, decreased slightly to 16% in 2023, and then rose sharply to 35% in 2024. The upward movement in the ratio reflects growing reliance on debt financing relative to the capital base over time, particularly in the most recent year.

Adjusted debt and capital

Adjusted total debt followed a similar trend to reported total debt but with generally higher values, starting from approximately $495 million in 2020, dipping slightly in 2021, then rising to about $924 million in 2022, followed by a small decline in 2023 before a pronounced jump to approximately $2.63 billion in 2024. This suggests that the adjusted debt accounts for additional components of indebtedness or liabilities not reflected in the reported total debt.

Adjusted total capital increased steadily from around $2.83 billion in 2020 to about $7.21 billion in 2024, mirroring the trend seen in reported total capital but with slightly different figures, indicating some adjustments in capital calculations.

Adjusted debt to capital ratio

The adjusted debt to capital ratio started at 18% in 2020 and decreased to 15% in 2021, then increased significantly to 26% in 2022. It dropped again to 20% in 2023 before rising sharply to 36% in 2024. This pattern shows some volatility but an overall clear increase, highlighting a growing proportion of debt in the overall capital structure after adjustments.

Overall, the company exhibits an expanding capital base with a notably increasing debt load, particularly in 2024. The upward trends in both reported and adjusted debt to capital ratios suggest a higher leverage level, which could imply increased financial risk but also potential for greater capital deployment through debt financing. The fluctuations indicate strategic adjustments in the company’s financing approach over the reviewed years.

The financial data reveals consistent growth in total assets and stockholders’ equity over the five-year period, with notable acceleration in 2024.

Total Assets

Total assets increased year-over-year, starting from approximately $3.95 billion in 2020 to reach about $8.97 billion by the end of 2024. The growth trend showed a gradual increase from 2020 through 2023, followed by a substantial jump between 2023 and 2024, indicating significant asset acquisition or valuation changes in the latest year.

Stockholders’ Equity

Stockholders’ equity followed a similar upward trajectory, rising from roughly $2.49 billion in 2020 to $4.67 billion in 2024. The increase was steady but saw a more pronounced rise from 2023 to 2024, suggesting strong capital retention or equity enhancements during this period.

Reported Financial Leverage

The reported financial leverage ratio started at 1.58 in 2020, showing minor fluctuations through 2021 and 2023, with a peak of 1.87 in 2022. The ratio slightly decreased in 2023 but rose again to 1.92 in 2024. This pattern indicates that, despite growth in equity, the company increased its reliance on debt relative to equity in the most recent year.

Adjusted Total Assets and Equity

Adjusted figures for total assets and stockholders’ equity present a similar growth pattern but at slightly lower magnitudes compared to the reported numbers. Adjusted total assets rose from about $3.22 billion in 2020 to nearly $8.00 billion in 2024, while adjusted equity increased from approximately $2.33 billion to $4.58 billion over the same period. The growth acceleration in 2024 is also evident here.

Adjusted Financial Leverage

The adjusted financial leverage ratio demonstrates a steadier pattern than the reported leverage. It started at 1.38 in 2020, remained relatively stable through 2021, edged up to 1.59 in 2022, dipped somewhat in 2023, and increased again to 1.74 in 2024. This indicates a moderate rise in indebtedness relative to equity when considering adjusted figures, consistent with the reported leverage trend but slightly lower in magnitude.

Overall, the data portrays a company experiencing significant growth in asset base and equity, with an increasing trend in financial leverage, particularly in the latest year. The elevated leverage suggests expanded use of debt financing alongside equity growth, which may reflect strategic investments or capital structure adjustments. The consistent differences between reported and adjusted figures underscore the impact of certain adjustments on financial presentation but follow parallel trends, affirming the overall financial trajectory.

Revenue Trends

Revenue has shown a consistent upward trend over the five-year period, increasing from approximately 2.68 billion USD in 2020 to roughly 4.64 billion USD in 2024. This indicates steady growth in the company's sales or service income, with pronounced increases each year, reflecting potentially expanding market share or higher pricing power.

Net Income Performance

The net income has also demonstrated a strong growth trajectory, rising from about 591 million USD in 2020 to over 1.05 billion USD in 2024. The increase in net income aligns with the growing revenue, suggesting effective management of costs and operational efficiencies that enhance profitability.

Reported Net Profit Margin

The reported net profit margin exhibits some fluctuations but remains relatively stable around the low to mid-20% range. It peaked at 25.46% in 2023 before declining to 22.74% in 2024. This suggests that while profitability is generally strong, there may have been factors in 2024 affecting cost structure or pricing, slightly compressing margins.

Adjusted Financial Figures

Adjusted revenue follows a similar upward trend as reported revenue but at slightly higher levels, suggesting adjustments for certain accounting elements or non-recurring items. Adjusted revenue increased from about 2.81 billion USD in 2020 to nearly 4.73 billion USD in 2024.

Adjusted net income shows a more modest growth, rising from approximately 710 million USD in 2020 to over 923 million USD in 2024. Notably, adjusted net income exhibits a decline between 2023 and 2024, diverging from the reported net income pattern, potentially indicating increased one-time or non-operational gains or losses excluded from the adjusted metrics.

The adjusted net profit margin shows more variability and a declining trend overall, falling from 25.29% in 2020 to 19.52% in 2024. This decline suggests that when excluding items accounted for in the adjustments, the core profitability may be under pressure, possibly due to rising costs or changes in business mix.

Overall Insights

The company demonstrates consistent growth in both revenue and net income over the five-year span. However, margin analysis reveals a nuanced picture: while reported margins remain relatively strong, adjusted margins decline. This divergence could imply that underlying operational profitability is weakening, despite reported earnings showing strong improvement. The 2024 data points to slight margin compression and a slowdown in adjusted net income growth, warranting attention to cost management and operational efficiencies going forward.

The net income of the company demonstrates a consistent upward trend from 2020 through 2024, growing from approximately 590.6 million US dollars to over 1.05 billion US dollars. This indicates steady profitability improvement over the five-year span.

Stockholders' equity also shows a substantial increase, rising from about 2.49 billion US dollars in 2020 to approximately 4.67 billion US dollars in 2024. The growth in equity reflects a strengthening capital base and possibly retained earnings accumulation or other equity-enhancing activities.

Reported Return on Equity (ROE)

ROE increased from 23.69% in 2020 to peak at 30.93% in 2022, maintaining a high level through 2023 at 30.58%, but then declined notably to 22.58% in 2024. This suggests that while the company was efficiently generating profits relative to equity for several years, its efficiency diminished in the latest year despite higher net income.

Adjusted Net Income

Adjusted net income follows a similar upward trajectory to reported net income from 2020 to 2023, increasing from 710.1 million US dollars to 988.3 million US dollars, but it decreases in 2024 to 923.1 million US dollars. This dip may hint at one-time adjustments or operational challenges affecting earnings quality.

Adjusted Stockholders' Equity

This metric grew substantially, from approximately 2.33 billion US dollars in 2020 to 4.58 billion US dollars in 2024, mirroring the trend in reported equity but slightly lower in absolute terms, implying certain adjustments made for analysis purposes.

Adjusted Return on Equity

Adjusted ROE was highest in 2020 at 30.46%, decreased to 27.61% in 2021, then stabilized around 30% through 2022 and 2023 before dropping sharply to 20.13% in 2024. The notable downturn in the last year aligns with the decline in adjusted net income and suggests reduced profitability efficiency on an adjusted basis.

Summarizing, the company has experienced strong growth in both net income and equity over the reviewed period, with peak profitability efficiency around 2022 and 2023. However, the decline in ROE in 2024—both reported and adjusted—alongside a reduction in adjusted net income suggests emerging challenges in maintaining profit generation relative to equity.

The financial data reveals several notable trends over the five-year period. Net income has shown a consistent upward trajectory from 590,644 thousand US dollars in 2020 to an estimated 1,055,484 thousand US dollars in 2024, reflecting sustained profitability growth. Total assets similarly increased substantially, rising from 3,950,785 thousand US dollars in 2020 to a projected 8,974,482 thousand US dollars in 2024, indicating significant asset base expansion.

However, while net income and total assets have grown, the reported return on assets (ROA) exhibits a more complex trend. Initially, ROA increased from 14.95% in 2020 to a peak of 18.36% in 2023, suggesting improved efficiency in generating profit relative to assets. This peak is followed by a notable decline to 11.76% in 2024, which may imply either less efficient asset utilization or changing financial conditions affecting profitability against asset size.

Adjusted financial figures provide additional insights. Adjusted net income grew from 710,119 thousand US dollars in 2020 to 988,274 thousand US dollars in 2023, before declining modestly to 923,058 thousand US dollars in 2024. Adjusted total assets followed an upward pattern from 3,221,362 thousand US dollars in 2020 to 7,998,233 thousand US dollars in 2024, resembling the trend observed in reported assets but with slightly lower absolute values.

The adjusted ROA trends downward over the full term from 22.04% in 2020 to 11.54% in 2024, indicating a progressive reduction in asset efficiency under adjusted metrics. After a dip in adjusted ROA to 18.87% in 2022, there was a temporary recovery to 20.61% in 2023, before the decline resumed in 2024.

Overall, the data suggests that the company has steadily increased both profitability and asset base; however, the efficiency measures point to challenges in sustaining proportional returns on these enlarged assets in the most recent period. This highlights a potential area of focus for improving operational efficiency or asset management going forward.