Cadence Design Systems Inc. (NASDAQ:CDNS)

The financial ratios exhibit notable patterns across the analyzed periods, indicating shifts in operational efficiency and asset utilization.

Net Fixed Asset Turnover

This ratio shows a generally upward trajectory from its initial available data point of 8.62 in the quarter ending December 31, 2020, peaking around 10.56 by June 30, 2025. The ratio gradually increased through 2021 and 2022, reaching values above 10, which suggests improved efficiency in using net fixed assets to generate sales over time. Some minor fluctuations occurred, such as a slight dip to 9.42 in December 31, 2023, followed by a recovery. Overall, this trend indicates a strengthening performance in fixed asset utilization.

Total Asset Turnover

The total asset turnover ratio initially improved from 0.68 at the start of the observed period in December 31, 2020, to reach 0.75 in October 1, 2022. Subsequently, the ratio experienced a decline, dropping to 0.47 by September 30, 2024. This decrease suggests a reduced ability of the company to generate revenue from its total assets during the later periods. Following this trough, a modest recovery is observable, with the ratio rising to 0.54 by June 30, 2025, indicating some restoration of asset efficiency. The mid-cycle decline could reflect challenges in asset utilization or changes in asset structure relative to revenue generation.

Equity Turnover

The equity turnover ratio exhibited growth from 1.08 in December 31, 2020, to a peak of approximately 1.31 in April 2, 2023. This upward movement points toward more effective use of shareholder equity to generate sales during this timeframe. However, after this peak, the ratio experienced a declining trend down to 0.95 by June 30, 2024, followed by a slight recovery to 1.02 in June 30, 2025. This pattern implies a reduction in sales efficiency relative to equity investment in the mid-to-late periods, with some improvement toward the end of the timeline.

In summary, while net fixed asset turnover demonstrated consistent improvement and strong utilization over the full time span, total asset turnover and equity turnover ratios revealed more variability, with peaks occurring in early to mid periods followed by declines and partial recoveries. These fluctuations suggest periods of both enhanced and diminished efficiency in leveraging assets and equity to drive sales, highlighting areas for potential operational focus.

Revenue Trends

The revenue demonstrated a generally upward trend throughout the reported periods. Starting from approximately $618 million in March 2020, the revenue increased consistently until reaching a peak of over $1.35 billion in December 2024. Notable growth phases include the periods from December 2020 to December 2021, where revenue rose from around $760 million to $773 million, and from December 2023 to December 2024, which showed a marked increase from around $1.07 billion to $1.36 billion. There were occasional slight declines or plateaus, such as between April 2022 and December 2022, where revenue fluctuated around the $900 million mark before rising again in 2023.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment (PP&E) showed a generally steady increase over the period. Starting from about $281 million in March 2020, the figure rose gradually to approximately $482 million by June 2025. The incremental increases suggest ongoing investments in fixed assets. Slight fluctuations were observed, for example, between July 2021 and December 2021, where the values remained relatively constant around $301-$306 million; however, a clear upward trajectory predominates across the full time frame.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio exhibited a range of fluctuations but generally maintained values between approximately 8.6 and 10.6 over the observed quarters. Starting from 8.62 in December 2020, this ratio increased to peak values above 10 during various quarters, including late 2023 and the 2024 periods. Notably, the ratio showed some volatility in the latter quarters of 2023 and 2024, with a decline to around 9.26 in the middle of 2024, followed by a recovery approaching 10.56 by mid-2025. This indicates relatively efficient utilization of fixed assets to generate revenue, with periods of improving efficiency offset by short-term moderate declines.

Summary Insights

The data indicates a strong growth trajectory in revenue, concurrent with steady investments in fixed assets as represented by PP&E values. The maintenance of a stable and moderately increasing fixed asset turnover ratio suggests effective asset management and operational efficiency levels that support revenue growth. Seasonal or period-specific fluctuations in revenue and efficiency metrics may warrant closer examination for operational optimization. Overall, the financial data points to positive business expansion supported by capital investment and asset utilization.

Revenue Trends

Revenue exhibited a generally increasing trajectory over the analyzed quarters, starting at approximately $618 million in early 2020 and rising to a peak exceeding $1.35 billion by the third quarter of 2024. There were periods of slight decline or stagnation, notably in mid-2021 where revenue dipped marginally, and some fluctuations in 2023. However, the overall trend demonstrates robust growth in revenue over the five-year span.

Total Assets

Total assets showed a steady increase from roughly $3.77 billion in the first quarter of 2020 to over $9.5 billion by the end of 2024. The asset base expanded gradually through 2021 and accelerated significantly from 2023 onwards, reflecting possible capital investments, acquisitions, or retained earnings growth. Minor slower growth or plateaus occurred around late 2022 and early 2023 but were followed by marked increases in subsequent quarters.

Total Asset Turnover

The total asset turnover ratio generally hovered in the range of 0.68 to 0.75 from late 2020 through 2022, indicating relatively consistent efficiency in generating revenue from assets during this period. Starting in early 2023, a noticeable decline in asset turnover emerged, dropping to approximately 0.58 and further to 0.47 by mid-2024. This decline suggests that asset growth outpaced revenue growth recently, resulting in reduced effectiveness in utilizing assets to generate sales. A slight recovery to around 0.54 was observed towards the end of the data series.

Overall Observations

The company demonstrated strong revenue growth in conjunction with significant expansion of total assets over five years. Nonetheless, the diminishing total asset turnover ratio in the latest periods indicates increasing challenges in sustaining asset efficiency. These patterns might point to substantial investments in assets that have yet to fully translate into proportional revenue increases, signaling potential strategic shifts requiring monitoring. The interplay between rapidly growing assets and fluctuating revenue efficiency will be critical to assess in future analyses.

The financial data reveals several notable trends in revenue, stockholders' equity, and equity turnover over the reported periods.

Revenue

Revenue demonstrates an overall upward trend with fluctuations. Starting from approximately 618 million USD in March 2020, the revenue increased steadily to above 1 billion USD by March 2023. During this period, occasional dips are observed, such as in July 2021 and July 2022, where revenues slightly declined from the previous quarters. The highest values were recorded in the last two quarters of 2024, reaching nearly 1.36 billion USD in December 2024, before decreasing slightly in early 2025. This suggests a generally strong growth trajectory with some short-term volatility.

Stockholders’ Equity

Stockholders’ equity has shown a consistent upward movement from about 2.16 billion USD in March 2020 to 5 billion USD by June 2025. This steady increase indicates robust accumulation of equity over time. Noteworthy is the acceleration of equity growth starting around September 2023, where equity rose more sharply, reflecting either retained earnings growth, new equity issuance, or other equity-enhancing activities. This steady equity growth supports a strengthening financial position.

Equity Turnover

Equity turnover data is only available for certain periods starting from December 2020. The ratio fluctuates within a range roughly from 0.95 to 1.31. Initially around 1.08 to 1.15, it reached a peak near 1.31 in March 2023, indicating an increase in revenue generated per unit of equity. After this peak, the ratio gradually declined, reaching values below 1.0 by late 2024, then slightly recovering to around 1.02 by mid-2025. The decline in turnover could suggest slower revenue growth relative to equity or increased equity base not fully matched by revenue increases in those periods.

In summary, the company has experienced strong revenue growth and a consistent increase in stockholders’ equity over the analyzed periods. The equity turnover ratio’s peak followed by a decline points to a changing relationship between revenue and equity, with potential implications for operational efficiency or capital management in more recent quarters.