Richard Sloan from the University of Michigan was first to document what is referred to as the "accrual anomaly". His 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones.
Cadence Design Systems's Sloan Ratio for the quarter that ended in Dec. 2023 was 1.84%.
As of Dec. 2023, Cadence Design Systems has a Sloan Ratio of 1.84%, indicating the company is in the safe zone and there is no funny business with accruals.
Cadence Design Systems Sloan Ratio % Historical Data
The historical data trend for Cadence Design Systems's Sloan Ratio % 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.
Competitive Comparison of Cadence Design Systems's Sloan Ratio %
For the Software - Application subindustry, Cadence Design Systems's Sloan Ratio %, along with its competitors' market caps and Sloan Ratio % 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 Sloan Ratio % Distribution in the Software Industry
For the Software industry and Technology sector, Cadence Design Systems's Sloan Ratio % distribution charts can be found below:
* The bar in red indicates where Cadence Design Systems's Sloan Ratio % falls into.
Cadence Design Systems Sloan Ratio % Calculation
Earnings contain a lot of non cash earnings which is called accruals. The Sloan ratio is a way to identify firms with low non-cash or accrual-derived earnings relative to their cash flow.
Cadence Design Systems's Sloan Ratio for the fiscal year that ended in Dec. 2023 is calculated as
Cadence Design Systems's Net Income for the trailing twelve months (TTM) ended in Dec. 2023 was 241.804 (Mar. 2023 ) + 221.12 (Jun. 2023 ) + 254.321 (Sep. 2023 ) + 323.899 (Dec. 2023 ) = $1,041 Mil.
Cadence Design Systems's Cash Flow from Operations for the trailing twelve months (TTM) ended in Dec. 2023 was 267.401 (Mar. 2023 ) + 413.77 (Jun. 2023 ) + 395.914 (Sep. 2023 ) + 272.091 (Dec. 2023 ) = $1,349 Mil.
Cadence Design Systems's Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2023 was -35.672 (Mar. 2023 ) + -94.069 (Jun. 2023 ) + -183.832 (Sep. 2023 ) + -98.676 (Dec. 2023 ) = $-412 Mil.
* 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.
Cadence Design Systems (NAS:CDNS) Sloan Ratio % Explanation
A former University of Michigan researcher, Richard Sloan's 1996 paper found that shares of companies with small or negative accruals vastly outperform (+10%) those of companies with large ones. In fact, for the 40-year period between 1962 and 2001, buying the lowest accrual companies and shorting the highest accrual companies resulted in an average annual compounded return of 18%, more than double the S&P 500's 7.4% annual return over the same period.
If the Sloan Ratio is between -10% and 10%, the company is in the safe zone and there is no funny business with accruals.
If the Sloan Ratio is less than between -25% and -10% on the negative side, and between 10% and 25% on the positive side, this is a warning stage of accrual build up.
If the Sloan Ratio is less than -25% or greater than 25%, and this ratio is consistent over several quarters or even years, be careful. Earnings are highly likely to be made up of accruals.
As of Dec. 2023, Cadence Design Systems has a Sloan Ratio of 1.84%, indicating the company is in the safe zone and there is no funny business with accruals.
Cadence Design Systems Sloan Ratio % Related Terms
Thank you for viewing the detailed overview of Cadence Design Systems's Sloan Ratio % provided by GuruFocus.com. Please click on the following links to see related term pages.
Cadence Design Systems (Cadence Design Systems) Business Description
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.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
CDNS has been successfully added to your 