Cadence Design Systems, Inc. — Earnings Quality Grade D
CDNS · Technology
Significant concerns
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 34 days, change +3 days YoY
AR outpaced revenue for 2 consecutive years
Revenue 14.1%, CFFO 37.1%. Cash follows revenue
Expense Quality
Inventory 17.8% vs COGS 11.5%. Normal
CapEx growth -0.5% vs revenue 14.1%. Normal
SG&A/Gross Profit = 24.4%, excellent (<30%)
Gross margin 86.4%, change +0.3pp. Stable
Cash Flow Quality
CFFO/NI = 1.56. Profits backed by cash
FCF $1.6B, FCF/NI = 1.43
Accruals ratio = -6.1%. Low accruals
Cash $3.2B covers debt $2.6B
Balance Sheet Health
Goodwill+Intangibles $3.5B = 63% of equity. Over 50%
Debt/EBITDA = 1.4x. Healthy
Other assets 23.1% vs revenue 14.1%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change 17% YoY. Normal
Manipulation Score
M-Score = -2.54 (< -2.22). Unlikely manipulator
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-08