Cadence Design Systems (BSP:C1DN34) Beneish M-Score : -2.70 (As of Apr. 25, 2024)

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What is Cadence Design Systems Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.7 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Cadence Design Systems's Beneish M-Score or its related term are showing as below:

BSP:C1DN34' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12 Med: -2.69 Max: -1.95
Current: -2.7

During the past 13 years, the highest Beneish M-Score of Cadence Design Systems was -1.95. The lowest was -3.12. And the median was -2.69.

Cadence Design Systems Beneish M-Score Historical Data

The historical data trend for Cadence Design Systems's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Cadence Design Systems Beneish M-Score Chart

Cadence Design Systems Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Beneish M-Score

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-1.95

-2.75

-2.92

-2.48

-2.70

Cadence Design Systems Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
Beneish M-Score	Get a 7-Day Free Trial															-2.46	-2.65	-2.67	-2.70	-

Competitive Comparison of Cadence Design Systems's Beneish M-Score

For the Software - Application subindustry, Cadence Design Systems's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Cadence Design Systems's Beneish M-Score Distribution in the Software Industry

For the Software industry and Technology sector, Cadence Design Systems's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Cadence Design Systems's Beneish M-Score falls into.

Cadence Design Systems Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Cadence Design Systems for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.7272

0.528 * 0.9987

0.404 * 0.9793

0.892 * 1.0498

0.115 * 1.0189

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.9893

4.679 * -0.063909

0.327 * 0.8721

-2.95

This Year (Mar24) TTM:

Last Year (Mar23) TTM:

Total Receivables was R$1,941 Mil.
Revenue was 5025.131 + 5236.039 + 5052.754 + 4740.021 = R$20,054 Mil.
Gross Profit was 4401.675 + 4725.975 + 4511.567 + 4269.989 = R$17,909 Mil.
Total Current Assets was R$9,611 Mil.
Total Assets was R$28,495 Mil.
Property, Plant and Equipment(Net PPE) was R$2,156 Mil.
Depreciation, Depletion and Amortization(DDA) was R$745 Mil.
Selling, General, & Admin. Expense(SGA) was R$4,732 Mil.
Total Current Liabilities was R$7,299 Mil.
Long-Term Debt & Capital Lease Obligation was R$1,493 Mil.
Net Income was 1233.213 + 1587.04 + 1256.015 + 1073.25 = R$5,150 Mil.
Non Operating Income was 293.743 + 135.764 + -19.404 + 2.65 = R$413 Mil.
Cash Flow from Operations was 1261.045 + 1333.191 + 1955.3 + 2008.315 = R$6,558 Mil.

Total Receivables was R$2,543 Mil.
Revenue was 5321.575 + 4720.215 + 4732.632 + 4328.509 = R$19,103 Mil.
Gross Profit was 4673.25 + 4229.885 + 4273.036 + 3860.849 = R$17,037 Mil.
Total Current Assets was R$8,847 Mil.
Total Assets was R$26,937 Mil.
Property, Plant and Equipment(Net PPE) was R$1,943 Mil.
Depreciation, Depletion and Amortization(DDA) was R$688 Mil.
Selling, General, & Admin. Expense(SGA) was R$4,556 Mil.
Total Current Liabilities was R$6,153 Mil.
Long-Term Debt & Capital Lease Obligation was R$3,377 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total Receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI	=	(Receivables_t / Revenue_t)	/	(Receivables_t-1 / Revenue_t-1)
	=	(1941.45 / 20053.945)	/	(2543.031 / 19102.931)
	=	0.096811	/	0.133123
	=	0.7272

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI	=	GrossMargin_t-1	/	GrossMargin_t
	=	(GrossProfit_t-1 / Revenue_t-1)	/	(GrossProfit_t / Revenue_t)
	=	(17037.02 / 19102.931)	/	(17909.206 / 20053.945)
	=	0.891854	/	0.893052
	=	0.9987

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (9610.675 + 2156.333) / 28495.063)	/	(1 - (8847.036 + 1942.579) / 26936.895)
	=	0.587051	/	0.599448
	=	0.9793

4. SGI = Sales Growth Index

Ratio of Revenue in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI	=	Sales_t	/	Sales_t-1
	=	Revenue_t	/	Revenue_t-1
	=	20053.945	/	19102.931
	=	1.0498

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI	=	(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))	/	(Depreciation_t / (Depreciaton_t + PPE_t))
	=	(688.072 / (688.072 + 1942.579))	/	(744.678 / (744.678 + 2156.333))
	=	0.26156	/	0.256696
	=	1.0189

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI	=	(SGA_t / Sales_t)	/	(SGA_t-1 /Sales_t-1)
	=	(4731.785 / 20053.945)	/	(4556.149 / 19102.931)
	=	0.235953	/	0.238505
	=	0.9893

7. LVGI = Leverage Index

The ratio of total debt to Total Assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((1492.969 + 7299.107) / 28495.063)	/	((3376.741 + 6153.341) / 26936.895)
	=	0.308547	/	0.353793
	=	0.8721

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA	=	(IncomefromContinuingOperations_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(NetIncome_t - NonOperatingIncome_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(5149.518 - 412.753	-	6557.851)	/	28495.063
	=	-0.063909

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Cadence Design Systems has a M-score of -2.95 suggests that the company is unlikely to be a manipulator.

Cadence Design Systems Beneish M-Score Related Terms

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Cadence Design Systems (BSP:C1DN34) Business Description

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Address

2655 Seely Avenue, Building 5, San Jose, CA, USA, 95134

Website

https://www.cadence.com

Cadence Design Systems is a provider of electronic design automation software, intellectual property, and system design and analysis products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. Cadence offers a portfolio of design IP, as well as system design and analysis products, which enable system-level analysis and verification solutions. Cadence's comprehensive portfolio is benefiting from a mutual convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house semiconductor design. The resulting expansion in EDA customers, alongside secular digitalization of various end markets, benefits EDA vendors like Cadence.

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