Stock Analysis on Net

Adobe Inc. (NASDAQ:ADBE)

Return on Capital (ROC)

Microsoft Excel

Return on Invested Capital (ROIC)

Adobe Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel
Dec 1, 2023 Dec 2, 2022 Dec 3, 2021 Nov 27, 2020 Nov 29, 2019 Nov 30, 2018
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 5,413 5,690 6,201 4,082 3,448 2,711
Invested capital2 24,970 21,130 21,065 18,837 17,466 15,711
Performance Ratio
ROIC3 21.68% 26.93% 29.44% 21.67% 19.74% 17.25%
Benchmarks
ROIC, Competitors4
Accenture PLC 21.14% 23.93% 25.83% 26.30% 24.83% 25.00%
International Business Machines Corp. 7.63% -0.68% 3.78% 3.44% 7.64%
Intuit Inc. 8.53% 9.30% 17.64% 20.65% 34.71% 32.34%
Microsoft Corp. 28.71% 36.59% 45.56% 43.43% 38.28% 19.75%
Oracle Corp. 10.34% 9.70% 17.55% 11.53% 15.18% 5.88%
Palo Alto Networks Inc. 28.59% 19.73% 11.48% 9.91% 13.83% 10.72%
Salesforce Inc. 3.00% 5.42% 8.23% 5.09% 8.97%
ServiceNow Inc. 22.31% 17.69% 18.88% 20.49% 19.87%
Synopsys Inc. 11.03% 17.54% 11.52% 11.63% 8.35% 6.37%

Based on: 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

1 NOPAT. See details »

2 Invested capital. See details »

3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 5,413 ÷ 24,970 = 21.68%

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. ROIC deteriorated from 2021 to 2022 and from 2022 to 2023.

Decomposition of ROIC

Adobe Inc., decomposition of ROIC

Microsoft Excel
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 1, 2023 21.68% = 35.97% × 0.80 × 75.46%
Dec 2, 2022 26.93% = 36.56% × 0.86 × 85.78%
Dec 3, 2021 29.44% = 40.89% × 0.80 × 89.72%
Nov 27, 2020 21.67% = 34.42% × 0.70 × 90.37%
Nov 29, 2019 19.74% = 31.93% × 0.67 × 92.94%
Nov 30, 2018 17.25% = 35.32% × 0.61 × 80.03%

Based on: 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

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 decrease in return on invested capital (ROIC) over 2023 year is the increase in effective cash tax rate (CTR).


Operating Profit Margin (OPM)

Adobe Inc., OPM calculation, comparison to benchmarks

Microsoft Excel
Dec 1, 2023 Dec 2, 2022 Dec 3, 2021 Nov 27, 2020 Nov 29, 2019 Nov 30, 2018
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 5,413 5,690 6,201 4,082 3,448 2,711
Add: Cash operating taxes2 1,761 943 710 435 262 676
Net operating profit before taxes (NOPBT) 7,174 6,633 6,912 4,518 3,709 3,387
 
Revenue 19,409 17,606 15,785 12,868 11,171 9,030
Add: Increase (decrease) in deferred revenue 536 536 1,119 258 447 559
Adjusted revenue 19,945 18,142 16,904 13,126 11,618 9,589
Profitability Ratio
OPM3 35.97% 36.56% 40.89% 34.42% 31.93% 35.32%
Benchmarks
OPM, Competitors4
Accenture PLC 14.56% 15.48% 16.65% 16.59% 14.89% 14.07%
International Business Machines Corp. 17.57% 2.98% 10.91% 9.64% 15.99%
Intuit Inc. 23.08% 21.00% 28.02% 29.42% 28.33% 25.71%
Microsoft Corp. 43.20% 43.28% 43.49% 38.29% 36.61% 35.11%
Oracle Corp. 26.91% 24.11% 40.03% 34.29% 34.21% 35.42%
Palo Alto Networks Inc. 29.22% 23.90% 16.95% 17.41% 16.22% 16.97%
Salesforce Inc. 10.25% 16.40% 20.24% 15.63% 19.12%
ServiceNow Inc. 18.76% 14.87% 17.20% 17.77% 14.93%
Synopsys Inc. 20.63% 27.91% 22.47% 22.28% 17.29% 15.30%

Based on: 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × 7,174 ÷ 19,945 = 35.97%

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. OPM deteriorated from 2021 to 2022 and from 2022 to 2023.

Turnover of Capital (TO)

Adobe Inc., TO calculation, comparison to benchmarks

Microsoft Excel
Dec 1, 2023 Dec 2, 2022 Dec 3, 2021 Nov 27, 2020 Nov 29, 2019 Nov 30, 2018
Selected Financial Data (US$ in millions)
Revenue 19,409 17,606 15,785 12,868 11,171 9,030
Add: Increase (decrease) in deferred revenue 536 536 1,119 258 447 559
Adjusted revenue 19,945 18,142 16,904 13,126 11,618 9,589
 
Invested capital1 24,970 21,130 21,065 18,837 17,466 15,711
Efficiency Ratio
TO2 0.80 0.86 0.80 0.70 0.67 0.61
Benchmarks
TO, Competitors3
Accenture PLC 1.94 2.08 1.95 1.97 2.16 2.38
International Business Machines Corp. 0.56 0.58 0.52 0.58 0.59
Intuit Inc. 0.61 0.52 0.79 0.89 1.50 1.50
Microsoft Corp. 0.88 1.04 1.20 1.35 1.35 1.41
Oracle Corp. 0.52 0.54 0.51 0.44 0.55 0.55
Palo Alto Networks Inc. 1.01 0.86 0.74 0.62 0.90 0.67
Salesforce Inc. 0.39 0.36 0.44 0.41 0.51
ServiceNow Inc. 1.24 1.24 1.16 1.23 1.36
Synopsys Inc. 0.71 0.71 0.63 0.58 0.58 0.59

Based on: 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

1 Invested capital. See details »

2 2023 Calculation
TO = Adjusted revenue ÷ Invested capital
= 19,945 ÷ 24,970 = 0.80

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. TO improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Effective Cash Tax Rate (CTR)

Adobe Inc., CTR calculation, comparison to benchmarks

Microsoft Excel
Dec 1, 2023 Dec 2, 2022 Dec 3, 2021 Nov 27, 2020 Nov 29, 2019 Nov 30, 2018
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 5,413 5,690 6,201 4,082 3,448 2,711
Add: Cash operating taxes2 1,761 943 710 435 262 676
Net operating profit before taxes (NOPBT) 7,174 6,633 6,912 4,518 3,709 3,387
Tax Rate
CTR3 24.54% 14.22% 10.28% 9.63% 7.06% 19.97%
Benchmarks
CTR, Competitors4
Accenture PLC 25.34% 25.55% 20.47% 19.34% 22.96% 25.38%
International Business Machines Corp. 22.56% 139.75% 33.85% 37.95% 18.49%
Intuit Inc. 39.49% 14.74% 20.15% 20.99% 18.37% 16.40%
Microsoft Corp. 24.32% 18.98% 13.05% 15.80% 22.65% 60.11%
Oracle Corp. 25.66% 26.20% 13.28% 23.42% 19.20% 70.01%
Palo Alto Networks Inc. 2.83% 3.82% 8.83% 7.62% 5.72% 6.34%
Salesforce Inc. 25.51% 8.31% 6.79% 19.81% 7.62%
ServiceNow Inc. 4.32% 4.41% 5.03% 5.90% 2.51%
Synopsys Inc. 24.60% 11.45% 18.39% 10.36% 16.50% 28.97%

Based on: 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,761 ÷ 7,174 = 24.54%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Adobe Inc. CTR increased from 2021 to 2022 and from 2022 to 2023.