Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Adobe Inc. (NASDAQ:ADBE)

Analysis of Goodwill and Intangible Assets

Advanced level

Goodwill and Intangible Asset Disclosure

Adobe Inc., balance sheet: goodwill and intangible assets

US$ in millions

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Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
Goodwill 10,742  10,691  10,581  5,822  5,406  5,367 
Customer contracts and relationships 958  1,219  1,329  577  541  507 
Purchased technology 756  759  750  223  149  199 
Trademarks 384  384  385  76  76  81 
Other 84  227  257  110  127  182 
Other intangibles, gross carrying amount 2,182  2,589  2,722  987  894  969 
Accumulated amortization (823) (869) (653) (602) (479) (459)
Other intangibles, net 1,359  1,721  2,069  386  414  510 
Goodwill and purchased and other intangibles 12,101  12,412  12,650  6,207  5,821  5,877 

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Adobe Inc.’s goodwill increased from 2018 to 2019 and from 2019 to 2020.
Other intangibles, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Adobe Inc.’s other intangibles, net decreased from 2018 to 2019 and from 2019 to 2020.
Goodwill and purchased and other intangibles Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Adobe Inc.’s goodwill and purchased and other intangibles decreased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Goodwill

Adobe Inc., adjustments to financial statements

US$ in millions

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Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
Adjustment to Total Assets
Total assets (as reported) 24,284  20,762  18,769  14,536  12,707  11,726 
Less: Goodwill 10,742  10,691  10,581  5,822  5,406  5,367 
Total assets (adjusted) 13,542  10,071  8,188  8,714  7,301  6,360 
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 13,264  10,530  9,362  8,460  7,425  7,002 
Less: Goodwill 10,742  10,691  10,581  5,822  5,406  5,367 
Stockholders’ equity (adjusted) 2,522  (161) (1,219) 2,638  2,018  1,635 

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

Adobe Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Adobe Inc., adjusted financial ratios

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Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
Total Asset Turnover
Reported total asset turnover 0.53 0.54 0.48 0.50 0.46 0.41
Adjusted total asset turnover 0.95 1.11 1.10 0.84 0.80 0.75
Financial Leverage
Reported financial leverage 1.83 1.97 2.00 1.72 1.71 1.67
Adjusted financial leverage 5.37 — — 3.30 3.62 3.89
Return on Equity (ROE)
Reported ROE 39.66% 28.03% 27.67% 20.02% 15.74% 8.99%
Adjusted ROE 208.56% — — 64.21% 57.91% 38.51%
Return on Assets (ROA)
Reported ROA 21.66% 14.22% 13.80% 11.65% 9.20% 5.37%
Adjusted ROA 38.84% 29.31% 31.64% 19.44% 16.01% 9.90%

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Adobe Inc.’s adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Adobe Inc.’s adjusted ROA deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Adobe Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

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Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
As Reported
Selected Financial Data (US$ in millions)
Revenue 12,868  11,171  9,030  7,302  5,854  4,796 
Total assets 24,284  20,762  18,769  14,536  12,707  11,726 
Activity Ratio
Total asset turnover1 0.53 0.54 0.48 0.50 0.46 0.41
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenue 12,868  11,171  9,030  7,302  5,854  4,796 
Adjusted total assets 13,542  10,071  8,188  8,714  7,301  6,360 
Activity Ratio
Adjusted total asset turnover2 0.95 1.11 1.10 0.84 0.80 0.75

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

2020 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 12,868 ÷ 24,284 = 0.53

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 12,868 ÷ 13,542 = 0.95

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Adobe Inc.’s adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Financial Leverage

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Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 24,284  20,762  18,769  14,536  12,707  11,726 
Stockholders’ equity 13,264  10,530  9,362  8,460  7,425  7,002 
Solvency Ratio
Financial leverage1 1.83 1.97 2.00 1.72 1.71 1.67
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 13,542  10,071  8,188  8,714  7,301  6,360 
Adjusted stockholders’ equity 2,522  (161) (1,219) 2,638  2,018  1,635 
Solvency Ratio
Adjusted financial leverage2 5.37 — — 3.30 3.62 3.89

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

2020 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 24,284 ÷ 13,264 = 1.83

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 13,542 ÷ 2,522 = 5.37

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 5,260  2,951  2,591  1,694  1,169  630 
Stockholders’ equity 13,264  10,530  9,362  8,460  7,425  7,002 
Profitability Ratio
ROE1 39.66% 28.03% 27.67% 20.02% 15.74% 8.99%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 5,260  2,951  2,591  1,694  1,169  630 
Adjusted stockholders’ equity 2,522  (161) (1,219) 2,638  2,018  1,635 
Profitability Ratio
Adjusted ROE2 208.56% — — 64.21% 57.91% 38.51%

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

2020 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 5,260 ÷ 13,264 = 39.66%

2 Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × 5,260 ÷ 2,522 = 208.56%

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Nov 27, 2020 Nov 29, 2019 Nov 30, 2018 Dec 1, 2017 Dec 2, 2016 Nov 27, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 5,260  2,951  2,591  1,694  1,169  630 
Total assets 24,284  20,762  18,769  14,536  12,707  11,726 
Profitability Ratio
ROA1 21.66% 14.22% 13.80% 11.65% 9.20% 5.37%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 5,260  2,951  2,591  1,694  1,169  630 
Adjusted total assets 13,542  10,071  8,188  8,714  7,301  6,360 
Profitability Ratio
Adjusted ROA2 38.84% 29.31% 31.64% 19.44% 16.01% 9.90%

Based on: 10-K (filing date: 2021-01-15), 10-K (filing date: 2020-01-21), 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 5,260 ÷ 24,284 = 21.66%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 5,260 ÷ 13,542 = 38.84%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Adobe Inc.’s adjusted ROA deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.