Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Adobe Inc., ROIC calculation, comparison to benchmarks
| Nov 29, 2019 | Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 3,447,569 | 2,710,671 | 2,238,829 | 1,742,264 | 918,162 | 575,952 | |
| Invested capital2 | 17,465,701 | 15,710,618 | 10,147,610 | 8,285,353 | 7,821,777 | 7,203,913 | |
| Performance Ratio | |||||||
| ROIC3 | 19.74% | 17.25% | 22.06% | 21.03% | 11.74% | 7.99% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Alphabet Inc. | 32.75% | 34.31% | 19.71% | 26.91% | 22.22% | — | |
| Autodesk Inc. | 0.93% | -11.17% | -9.45% | 8.45% | 10.16% | — | |
| Facebook Inc. | 27.51% | 36.42% | 37.03% | 25.08% | 9.26% | — | |
| International Business Machines Corp. | 7.84% | 8.46% | 5.77% | 10.53% | 13.69% | — | |
| Intuit Inc. | 34.72% | 32.34% | 36.84% | 34.96% | 28.34% | — | |
| Microsoft Corp. | 42.06% | 21.26% | 35.75% | 53.10% | 29.69% | — | |
| Oracle Corp. | 15.18% | 5.88% | 13.04% | 15.80% | 14.73% | — | |
| salesforce.com inc. | 8.95% | 9.47% | 7.75% | 9.27% | 6.61% | — | |
| ServiceNow Inc. | 19.88% | 15.78% | 15.89% | -10.81% | 0.75% | — | |
Based on: 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), 10-K (filing date: 2015-01-20).
1 NOPAT. See details »
2 Invested capital. See details »
3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 3,447,569 ÷ 17,465,701 = 19.74%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | Adobe Inc.’s ROIC deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level. |
Decomposition of ROIC
Adobe Inc., decomposition of ROIC
Based on: 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), 10-K (filing date: 2015-01-20).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the increase in return on invested capital (ROIC) over 2019 year is the decrease in effective cash tax rate (CTR).
Operating Profit Margin (OPM)
Adobe Inc., OPM calculation, comparison to benchmarks
| Nov 29, 2019 | Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 3,447,569 | 2,710,671 | 2,238,829 | 1,742,264 | 918,162 | 575,952 | |
| Add: Cash operating taxes2 | 261,836 | 676,497 | 399,697 | 256,972 | 323,638 | 150,909 | |
| Net operating profit before taxes (NOPBT) | 3,709,405 | 3,387,168 | 2,638,526 | 1,999,236 | 1,241,801 | 726,861 | |
| Revenue | 11,171,297 | 9,030,008 | 7,301,505 | 5,854,430 | 4,795,511 | 4,147,065 | |
| Add: Increase (decrease) in deferred revenue | 447,109 | 559,062 | 479,792 | 529,456 | 329,970 | 326,512 | |
| Adjusted revenue | 11,618,406 | 9,589,070 | 7,781,297 | 6,383,886 | 5,125,481 | 4,473,577 | |
| Profitability Ratio | |||||||
| OPM3 | 31.93% | 35.32% | 33.91% | 31.32% | 24.23% | 16.25% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Alphabet Inc. | 23.20% | 23.81% | 24.25% | 26.49% | 25.64% | — | |
| Autodesk Inc. | 3.88% | -13.37% | -9.48% | 13.40% | 12.87% | — | |
| Facebook Inc. | 34.36% | 44.37% | 49.93% | 44.85% | 34.99% | — | |
| International Business Machines Corp. | 16.43% | 14.56% | 16.13% | 16.19% | 19.65% | — | |
| Intuit Inc. | 28.32% | 25.71% | 28.07% | 29.36% | 24.51% | — | |
| Microsoft Corp. | 36.61% | 35.11% | 31.99% | 30.09% | 19.34% | — | |
| Oracle Corp. | 34.21% | 35.42% | 34.66% | 35.32% | 35.82% | — | |
| salesforce.com inc. | 18.93% | 16.11% | 15.00% | 15.40% | 11.86% | — | |
| ServiceNow Inc. | 14.97% | 14.28% | 13.97% | -7.00% | 2.38% | — | |
Based on: 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), 10-K (filing date: 2015-01-20).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × 3,709,405 ÷ 11,618,406 = 31.93%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | Adobe Inc.’s OPM improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019. |
Turnover of Capital (TO)
Adobe Inc., TO calculation, comparison to benchmarks
| Nov 29, 2019 | Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Revenue | 11,171,297 | 9,030,008 | 7,301,505 | 5,854,430 | 4,795,511 | 4,147,065 | |
| Add: Increase (decrease) in deferred revenue | 447,109 | 559,062 | 479,792 | 529,456 | 329,970 | 326,512 | |
| Adjusted revenue | 11,618,406 | 9,589,070 | 7,781,297 | 6,383,886 | 5,125,481 | 4,473,577 | |
| Invested capital1 | 17,465,701 | 15,710,618 | 10,147,610 | 8,285,353 | 7,821,777 | 7,203,913 | |
| Efficiency Ratio | |||||||
| TO2 | 0.67 | 0.61 | 0.77 | 0.77 | 0.66 | 0.62 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Alphabet Inc. | 1.61 | 1.58 | 1.69 | 1.25 | 1.05 | — | |
| Autodesk Inc. | 0.61 | 0.69 | 0.67 | 0.79 | 0.83 | — | |
| Facebook Inc. | 1.08 | 0.93 | 0.98 | 0.71 | 0.57 | — | |
| International Business Machines Corp. | 0.59 | 0.71 | 0.73 | 0.75 | 0.81 | — | |
| Intuit Inc. | 1.50 | 1.50 | 1.80 | 1.77 | 1.58 | — | |
| Microsoft Corp. | 1.49 | 1.52 | 1.31 | 1.94 | 2.27 | — | |
| Oracle Corp. | 0.55 | 0.55 | 0.49 | 0.58 | 0.57 | — | |
| salesforce.com inc. | 0.51 | 0.63 | 0.57 | 0.70 | 0.65 | — | |
| ServiceNow Inc. | 1.36 | 1.18 | 1.24 | 1.33 | 1.14 | — | |
Based on: 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), 10-K (filing date: 2015-01-20).
1 Invested capital. See details »
2 2019 Calculation
TO = Adjusted revenue ÷ Invested capital
= 11,618,406 ÷ 17,465,701 = 0.67
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | Adobe Inc.’s TO deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019. |
Effective Cash Tax Rate (CTR)
Adobe Inc., CTR calculation, comparison to benchmarks
| Nov 29, 2019 | Nov 30, 2018 | Dec 1, 2017 | Dec 2, 2016 | Nov 27, 2015 | Nov 28, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 3,447,569 | 2,710,671 | 2,238,829 | 1,742,264 | 918,162 | 575,952 | |
| Add: Cash operating taxes2 | 261,836 | 676,497 | 399,697 | 256,972 | 323,638 | 150,909 | |
| Net operating profit before taxes (NOPBT) | 3,709,405 | 3,387,168 | 2,638,526 | 1,999,236 | 1,241,801 | 726,861 | |
| Tax Rate | |||||||
| CTR3 | 7.06% | 19.97% | 15.15% | 12.85% | 26.06% | 20.76% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Alphabet Inc. | 12.46% | 8.68% | 52.04% | 18.98% | 17.49% | — | |
| Autodesk Inc. | 60.79% | — | — | 20.47% | 5.36% | — | |
| Facebook Inc. | 25.67% | 11.36% | 24.12% | 21.75% | 53.24% | — | |
| International Business Machines Corp. | 18.55% | 18.30% | 51.29% | 13.24% | 13.55% | — | |
| Intuit Inc. | 18.38% | 16.40% | 27.07% | 32.70% | 26.75% | — | |
| Microsoft Corp. | 22.65% | 60.11% | 14.62% | 9.05% | 32.49% | — | |
| Oracle Corp. | 19.20% | 70.01% | 22.82% | 22.47% | 27.32% | — | |
| salesforce.com inc. | 7.48% | 7.21% | 9.36% | 13.59% | 14.02% | — | |
| ServiceNow Inc. | 2.51% | 6.49% | 8.20% | — | 72.30% | — | |
Based on: 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), 10-K (filing date: 2015-01-20).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 261,836 ÷ 3,709,405 = 7.06%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Adobe Inc.’s CTR increased from 2017 to 2018 but then decreased significantly from 2018 to 2019. |