Cadence Design Systems Inc. (NASDAQ:CDNS)

The analysis of the financial ratios for the specified periods reveals several noteworthy trends and fluctuations in operational efficiency metrics.

Net Fixed Asset Turnover

This ratio demonstrates a generally upward trajectory from the earliest recorded period in December 2020 through to the latest forecasted period in March 2025. Initial values start at 8.62 and reach a peak around 10.45 by March 2025. The ratio experiences minor variances but maintains a consistent level above 9.0 after the initial measurement, indicating enhanced utilization of fixed assets in generating revenue over time. Occasional slight declines, such as the one observed near the end of 2023 and mid-2024, do not significantly disrupt the overall positive trend.

Total Asset Turnover

The total asset turnover ratio remains relatively stable in the early periods, hovering between 0.68 and 0.75 through 2021 and 2022, indicating steady efficiency in utilizing all assets to generate sales. However, from late 2023 onward, there is a notable decline, dipping as low as 0.47 by mid-2024 before a modest recovery to 0.54 by the first quarter of 2025. This downward trend suggests a potential reduction in overall asset efficiency during the latter periods, possibly due to increased asset base not immediately translating into proportional revenue growth.

Equity Turnover

The equity turnover ratio depicts a pattern of moderate growth initially, increasing from 1.08 in late 2020 to peak levels around 1.31 by mid-2023. This suggests an improved ability to generate revenue with shareholders' equity. Subsequently, a gradual decline is observed from the peak, falling below 1.0 around mid-2024, indicating diminished revenue generation efficiency relative to equity during this phase. The final periods show a slight recovery to just above 1.0 by early 2025, suggesting a beginning stabilization or improvement in equity utilization.

Overall, the data indicates that while fixed asset utilization has progressively improved, total asset and equity turnover ratios have experienced some volatility with downward trends evident in more recent periods. This divergence may suggest shifts in asset structure, investment strategies, or market conditions affecting the efficiency of asset and equity usage differently.

The financial data reveals several notable trends in the quarterly performance and asset utilization of the company over the observed periods.

Revenue Trends

Revenue exhibited a general upward trajectory from March 2020 through December 2025, with notable fluctuations. Starting at approximately $618 million in March 2020, revenue increased steadily to reach peaks above $1 billion from the first quarter of 2023 onwards. Despite some minor decreases in certain quarters—such as a decline from April 2022 to July 2022 and a decrease again from March 2025—the overall trend indicates consistent growth in top-line sales over the five-year span.

Property, Plant, and Equipment (PP&E), Net

Net PP&E values grew consistently across the quarters, moving from about $281 million in March 2020 to over $466 million by March 2025. This reflects ongoing capital investment and asset expansion. The growth pattern in net fixed assets is relatively steady, with incremental increases each quarter, demonstrating a commitment to maintaining or expanding production capability or infrastructure.

Net Fixed Asset Turnover

The net fixed asset turnover ratio, which measures revenue generated per unit of fixed assets, shows a moderately stable trend with slight fluctuations over the periods where data is available. Beginning around 8.62 and increasing to values over 10 by later quarters, it indicates improving efficiency or better utilization of fixed assets in generating revenue. The ratio demonstrates some volatility but generally suggests that the company has maintained or enhanced its ability to leverage fixed assets over time.

Overall Insights

The concurrent increase in both revenue and net fixed assets suggests a growth-oriented phase supported by capital expenditures. The improvement in net fixed asset turnover ratio alongside these increases points to effective asset management and operational efficiency. Periodic short-term revenue declines do not significantly detract from the long-term positive trend. The company appears to manage asset utilization effectively while pursuing expansion, as shown by the increasing fixed asset base and rising sales figures.

Revenue

The revenue demonstrated an overall upward trend throughout the periods presented, with some fluctuations. Starting at approximately $618 million in Q1 2020, revenue rose steadily to reach over $1 billion by Q1 2023. Revenue experienced occasional dips, notably in Q2 2021 and Q2 2023; however, the general movement was positive, peaking close to $1.36 billion in Q4 2024. This indicates consistent growth and periodic acceleration in sales or service delivery.

Total Assets

Total assets showed a gradual increasing trajectory over the analyzed quarters. Beginning near $3.77 billion in Q1 2020, assets grew steadily with some minor fluctuations, crossing $5 billion by early 2022. In subsequent periods, assets continued to rise sharply, especially from early 2023 to late 2024, reaching approximately $9 billion. This pattern suggests significant asset accumulation or investment activity over time, which could be associated with expansion, acquisitions, or enhanced capital expenditure.

Total Asset Turnover Ratio

The total asset turnover ratio, which measures how efficiently assets generate revenue, was mostly stable in the initial quarters, fluctuating between 0.68 and 0.75 from late 2020 through early 2023. This implies that the company was maintaining consistent asset utilization efficiency during this period. However, beginning in mid-2023, the ratio declined noticeably to a low of 0.47 by mid-2024, before recovering slightly to around 0.54 at the end of 2024. The decline suggests that revenue growth did not keep pace with asset growth during these periods, indicating a temporary reduction in operational efficiency or a lag in converting asset investments into sales.

Summary and Insights

Overall, the data depicts a company experiencing solid revenue growth accompanied by significant asset base expansion. The major increase in assets outpacing revenue growth in later periods adversely impacted the asset turnover ratio, signaling potential efficiency challenges or a strategic phase of investment. The rebound in revenue in late 2024 partially improved the turnover ratio, which may suggest initial results of asset utilization efforts. Continued monitoring of asset deployment effectiveness is advisable to ensure that asset growth translates into proportional revenue increases.

The revenue of the company demonstrates an overall upward trend from March 28, 2020, through March 31, 2025, albeit with notable fluctuations across quarters. Starting at approximately $618 million in early 2020, revenue grew moderately through late 2021, reaching around $773 million at the end of 2021. A more pronounced increase is observed beginning in 2022, with revenue frequently exceeding $900 million and peaking at about $1.36 billion in the third quarter of 2024. Despite some intermittent declines—such as dips observed in mid-2022 and early 2025—the general trajectory reflects growth in revenue over the five-year span.

Stockholders’ equity exhibited consistent growth throughout the period, moving from approximately $2.16 billion in the first quarter of 2020 to over $4.77 billion by the first quarter of 2025. This increase suggests strong accumulation of equity over time. Some minor declines occurred, such as around mid-2022; however, these were temporary, and the equity base resumed its upward momentum soon after. The acceleration of equity growth is particularly evident from early 2023 onward, with substantial increases quarter over quarter.

The equity turnover ratio, available from December 31, 2020, onward, indicates changes in how efficiently the company is generating revenue from its equity. Initially, the ratio hovered in a range slightly above 1.0, peaking at 1.31 in the third quarter of 2023. This suggests improving efficiency in using equity to generate sales during that period. However, from late 2023 through 2024, a declining trend is noticeable, with the ratio dropping below 1.0, reaching as low as 0.95 in mid-2024 before a modest recovery towards the end of 2024 and beginning of 2025. This decline in equity turnover ratio during 2024 might indicate a relatively faster increase in equity compared to revenue growth, or potential challenges in revenue generation relative to the equity base.

In summary, the company shows strong revenue growth and solid increases in stockholders’ equity over the observed periods. The equity turnover ratio reflects variations in capital efficiency, with peak performance around 2023 followed by a downturn and slight recovery in 2024 and early 2025. Together, these trends suggest healthy long-term expansion with cyclical variations in operational efficiency.