Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Long-term Activity Ratios (Summary)
Cadence Design Systems Inc., long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
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).
An analysis of long-term activity ratios reveals varying trends in asset utilization efficiency over the five-year period. Generally, the ratios suggest a moderate level of efficiency, with some indicators showing improvement while others demonstrate a decline.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio exhibits a generally positive trend, increasing from 9.77 in 2021 to 10.25 in 2025. This indicates a growing ability to generate revenue from fixed assets. The increase, while not dramatic, suggests improved operational efficiency in utilizing property, plant, and equipment. A slight dip occurred between 2021 and 2022, but was quickly recovered.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- Similar to the standard net fixed asset turnover, this ratio also shows an overall upward trend, rising from 6.85 in 2021 to 7.68 in 2024 before experiencing a slight decrease to 7.64 in 2025. The inclusion of operating lease obligations and right-of-use assets provides a more comprehensive view of asset utilization, and the trend suggests increasing efficiency in utilizing both owned and leased fixed assets. The leveling off in 2025 warrants further investigation.
- Total Asset Turnover
- In contrast to the fixed asset turnover ratios, the total asset turnover ratio demonstrates a declining trend. Starting at 0.68 in 2021 and 0.69 in 2022, it increased to 0.72 in 2023, but then decreased significantly to 0.52 in both 2024 and 2025. This suggests a decreasing ability to generate revenue from all assets, potentially indicating inefficiencies in managing current assets or an increase in less productive assets. The substantial drop in 2024 and its continuation into 2025 are concerning and require further scrutiny.
- Equity Turnover
- The equity turnover ratio initially increased from 1.09 in 2021 to 1.30 in 2022, but then began a downward trend, falling to 0.97 in 2025. This indicates a decreasing ability to generate revenue from shareholder equity. The decline suggests that the company is becoming less efficient in utilizing equity financing to generate sales, or that equity is growing at a faster rate than revenue. The trend from 2023 onwards is particularly noticeable.
In summary, while the company appears to be improving its efficiency in utilizing fixed assets, the declining total asset and equity turnover ratios suggest potential issues with overall asset management and the effective use of equity financing. The contrasting trends across these ratios highlight the need for a more detailed investigation into the underlying drivers of these changes.
Net Fixed Asset Turnover
Cadence Design Systems Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Property, plant and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Software & Services | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Information Technology | ||||||
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).
1 2025 Calculation
Net fixed asset turnover = Revenue ÷ Property, plant and equipment, net
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio exhibits a generally positive trend over the five-year period. Revenue consistently increased annually, while the net value of property, plant, and equipment also rose each year, though at a slower pace than revenue. This resulted in fluctuations in the ratio, but ultimately a net increase over the observed timeframe.
- Net Fixed Asset Turnover
- In 2021, the net fixed asset turnover ratio was 9.77. A slight decrease to 9.59 was observed in 2022. The ratio then increased to 10.14 in 2023 and remained relatively stable at 10.13 in 2024. Further growth was seen in 2025, with the ratio reaching 10.25.
- Revenue Trend
- Revenue increased from US$2,988,244 thousand in 2021 to US$5,296,759 thousand in 2025, representing a substantial overall increase. The largest year-over-year increase occurred between 2022 and 2023.
- Property, Plant, and Equipment Trend
- Net property, plant, and equipment increased from US$305,911 thousand in 2021 to US$517,004 thousand in 2025. The rate of increase in this asset base was slower than the rate of revenue growth, contributing to the observed trend in the net fixed asset turnover ratio.
- Overall Interpretation
- The increasing net fixed asset turnover ratio suggests that the company is becoming more efficient in utilizing its fixed assets to generate revenue. The consistent revenue growth, coupled with a comparatively slower increase in fixed assets, indicates improved asset utilization. The ratio’s stability in 2023 and 2024, followed by a further increase in 2025, suggests a sustained improvement in operational efficiency.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Cadence Design Systems Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Property, plant and equipment, net | ||||||
| ROU operating lease assets | ||||||
| Property, plant and equipment, net (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Software & Services | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Information Technology | ||||||
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).
1 2025 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenue ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
The analysis reveals a generally positive trend in revenue alongside increasing net fixed assets over the five-year period. The net fixed asset turnover ratio demonstrates fluctuations but ultimately exhibits an overall improvement, suggesting increasing efficiency in asset utilization.
- Revenue Trend
- Revenue experienced consistent year-over-year growth throughout the period. Starting at US$2,988,244 thousand in 2021, it rose to US$5,296,759 thousand in 2025, representing a substantial overall increase. The rate of growth appears to have accelerated between 2022 and 2024.
- Net Fixed Asset Trend
- Net fixed assets, inclusive of operating leases and right-of-use assets, also increased steadily from US$436,035 thousand in 2021 to US$692,968 thousand in 2025. The increase was most pronounced between 2021 and 2022, followed by more moderate growth in subsequent years.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio, which measures the efficiency with which a company generates revenue from its fixed assets, initially decreased from 6.85 in 2021 to 6.57 in 2022. However, the ratio then improved significantly, reaching 7.38 in 2023 and peaking at 7.68 in 2024. A slight decrease to 7.64 was observed in 2025, but the ratio remained above the levels seen in 2021 and 2022. This suggests that, despite the increase in fixed assets, the company has generally become more effective at generating sales from those assets.
The observed pattern indicates a positive correlation between revenue growth and efficient asset utilization. While fixed asset investment increased, the company successfully leveraged those investments to drive revenue, as evidenced by the improving turnover ratio. The slight dip in the ratio in 2025 warrants monitoring in future periods to determine if it represents a temporary fluctuation or the beginning of a new trend.
Total Asset Turnover
Cadence Design Systems Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Total Asset Turnover, Sector | ||||||
| Software & Services | ||||||
| Total Asset Turnover, Industry | ||||||
| Information Technology | ||||||
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).
1 2025 Calculation
Total asset turnover = Revenue ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibits a fluctuating pattern over the five-year period. Initially, the ratio demonstrates an increasing trend, followed by a notable decline and subsequent stabilization.
- Overall Trend
- From 2021 to 2023, the total asset turnover ratio increased from 0.68 to 0.72. This suggests improving efficiency in asset utilization during this timeframe, meaning the company generated more revenue per dollar of assets. However, this positive trend reversed in subsequent years.
- Decline and Stabilization
- A significant decrease in the total asset turnover ratio is observed between 2023 and 2024, falling from 0.72 to 0.52. This indicates a reduced ability to generate sales from its asset base. The ratio remained constant at 0.52 for both 2024 and 2025, suggesting the decreased efficiency has stabilized, but has not recovered.
- Revenue and Asset Relationship
- Revenue consistently increased throughout the period, rising from US$2,988,244 thousand in 2021 to US$5,296,759 thousand in 2025. However, the growth in total assets outpaced revenue growth, particularly between 2023 and 2025. This disproportionate asset growth is the primary driver of the declining asset turnover ratio.
The stabilization of the ratio at 0.52 in the latest two years suggests that the company’s investment in assets may be reaching a point of diminishing returns in terms of revenue generation, or that the benefits of those investments have not yet fully materialized. Further investigation into the composition of asset growth would be necessary to understand the underlying causes of this trend.
Equity Turnover
Cadence Design Systems Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Stockholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| AppLovin Corp. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Equity Turnover, Sector | ||||||
| Software & Services | ||||||
| Equity Turnover, Industry | ||||||
| Information Technology | ||||||
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).
1 2025 Calculation
Equity turnover = Revenue ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The equity turnover ratio exhibits a fluctuating pattern over the five-year period. Initially, the ratio increased from 1.09 in 2021 to 1.30 in 2022, indicating a more efficient utilization of stockholders’ equity to generate revenue. However, this upward momentum was not sustained. The ratio decreased to 1.20 in 2023, and continued to decline to 0.99 in 2024 and further to 0.97 in 2025.
- Equity Turnover Trend
- The observed decline in equity turnover from 2022 through 2025 suggests a decreasing efficiency in generating revenue from the company’s equity base. While revenue consistently increased throughout the period, the growth in stockholders’ equity outpaced revenue growth in the latter years, resulting in the lower turnover figures.
The increase in revenue from US$2,988,244 thousand in 2021 to US$5,296,759 thousand in 2025 is substantial. Simultaneously, stockholders’ equity also increased significantly, moving from US$2,740,675 thousand to US$5,474,181 thousand over the same timeframe. The ratio’s behavior indicates that the company is reinvesting a considerable portion of its earnings back into the business, expanding its equity base, which, while positive for long-term growth, temporarily reduces the efficiency with which equity generates revenue as measured by this ratio.
- Revenue and Equity Relationship
- The parallel growth of revenue and stockholders’ equity is evident. The decreasing equity turnover ratio suggests that the expansion of equity is occurring at a faster rate than revenue generation, potentially due to investments in long-term projects or acquisitions that have not yet fully translated into increased revenue.
The ratio’s movement below 1.00 in the final two years of the observed period warrants attention. An equity turnover ratio below 1.00 implies that the company is generating less than one dollar of revenue for each dollar of equity. While not necessarily indicative of poor performance, it suggests a potential area for improvement in asset utilization and revenue generation relative to the equity invested.