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Adobe Systems Inc (NAS:ADBE)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Adobe Systems Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

ADBE' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Adobe Systems Inc was 9. The lowest was 3. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (May15) TTM:Last Year (May14) TTM:
Net Income was 44.686 + 88.136 + 84.888 + 147.493 = $365 Mil.
Cash Flow from Operations was 268.52 + 399.753 + 183.015 + 471.484 = $1,323 Mil.
Revenue was 1005.409 + 1073.328 + 1109.181 + 1162.158 = $4,350 Mil.
Gross Profit was 847.685 + 912.385 + 942.383 + 976.985 = $3,679 Mil.
Average Total Assets from the begining of this year (May14)
to the end of this year (May15) was
(10372.199 + 10493.68 + 10785.829 + 11008.422 + 11165.383) / 5 = $10765.1026 Mil.
Total Assets at the begining of this year (May14) was $10,372 Mil.
Long-Term Debt was $1,904 Mil.
Total Current Assets was $4,178 Mil.
Total Current Liabilities was $1,937 Mil.
Net Income was 83.002 + 65.32 + 47.046 + 88.527 = $284 Mil.

Revenue was 995.119 + 1041.699 + 1000.12 + 1068.208 = $4,105 Mil.
Gross Profit was 848.043 + 894.183 + 851.611 + 913.304 = $3,507 Mil.
Average Total Assets from the begining of last year (May13)
to the end of last year (May14) was
(10280.369 + 10234.156 + 10380.298 + 10245.882 + 10372.199) / 5 = $10302.5808 Mil.
Total Assets at the begining of last year (May13) was $10,280 Mil.
Long-Term Debt was $897 Mil.
Total Current Assets was $4,114 Mil.
Total Current Liabilities was $2,218 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Adobe Systems Inc's current net income (TTM) was 365. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Adobe Systems Inc's current cash flow from operations (TTM) was 1,323. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (May14)
=365.203/10372.199
=0.03520979

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (May13)
=283.895/10280.369
=0.02761525

Adobe Systems Inc's return on assets of this year was 0.03520979. Adobe Systems Inc's return on assets of last year was 0.02761525. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Adobe Systems Inc's current net income (TTM) was 365. Adobe Systems Inc's current cash flow from operations (TTM) was 1,323. ==> 1,323 > 365 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: May15)=Long-Term Debt/Average Total Assets from May14 to May15
=1904.376/10765.1026
=0.17690273

Gearing (Last Year: May14)=Long-Term Debt/Average Total Assets from May13 to May14
=896.551/10302.5808
=0.08702198

Adobe Systems Inc's gearing of this year was 0.17690273. Adobe Systems Inc's gearing of last year was 0.08702198. ==> Last year is lower than this year ==> Score 0.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: May15)=Total Current Assets/Total Current Liabilities
=4178.397/1937.033
=2.15711193

Current Ratio (Last Year: May14)=Total Current Assets/Total Current Liabilities
=4114.343/2217.972
=1.85500223

Adobe Systems Inc's current ratio of this year was 2.15711193. Adobe Systems Inc's current ratio of last year was 1.85500223. ==> This year's current ratio is higher. ==> Score 1.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Adobe Systems Inc's number of shares in issue this year was 505.6. Adobe Systems Inc's number of shares in issue last year was 506.7. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=3679.438/4350.076
=0.84583304

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3507.141/4105.146
=0.85432796

Adobe Systems Inc's gross margin of this year was 0.84583304. Adobe Systems Inc's gross margin of last year was 0.85432796. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (May14)
=4350.076/10372.199
=0.41939766

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (May13)
=4105.146/10280.369
=0.39931893

Adobe Systems Inc's asset turnover of this year was 0.41939766. Adobe Systems Inc's asset turnover of last year was 0.39931893. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+0+1+1+0+1
=7

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Adobe Systems Inc has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Adobe Systems Inc Annual Data

Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14
Question 1 1111111111
Question 2 1111111111
Question 3 1001010000
Question 4 1111111111
Question 5 1110001111
Question 6 1101011100
Question 7 0011111101
Question 8 1011101000
Question 9 0101010000
F-score 7668577645

Adobe Systems Inc Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000011
Question 4 1111111111
Question 5 1111111100
Question 6 1100000011
Question 7 0000011111
Question 8 0000000000
Question 9 0000000011
F-score 5544455577
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