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

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Adobe Systems Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

ADBE' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 5

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 (May14) TTM:Last Year (May13) TTM:
Net Income was 88.527 + 47.046 + 65.32 + 83.002 = $284 Mil.
Cash Flow from Operations was 367.536 + 251.673 + 314.982 + 215.525 = $1,150 Mil.
Revenue was 1068.208 + 1000.12 + 1041.699 + 995.119 = $4,105 Mil.
Gross Profit was 913.304 + 851.611 + 894.183 + 848.043 = $3,507 Mil.
Total Assets at the begining of this year (May13) was $10,280 Mil.
Total Assets was $10,372 Mil.
Long-Term Debt was $897 Mil.
Total Current Assets was $4,114 Mil.
Total Current Liabilities was $2,218 Mil.
Net Income was 76.546 + 65.117 + 222.333 + 201.357 = $565 Mil.

Revenue was 1010.549 + 1007.873 + 1153.428 + 1080.58 = $4,252 Mil.
Gross Profit was 875.268 + 851.189 + 1028.45 + 960.959 = $3,716 Mil.
Total Assets at the begining of last year (May12) was $9,366 Mil.
Total Assets was $10,280 Mil.
Long-Term Debt was $1,506 Mil.
Total Current Assets was $4,558 Mil.
Total Current Liabilities was $1,265 Mil.

Profitability

Q1. 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 was 284. ==> Positive ==> Score 1.

Q2. 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 was 1,150. ==> Positive ==> Score 1.

Q3. 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/Total Assets at the beginning of this year (May13)
=283.895/10280.369
=0.02761525

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (May12)
=565.353/9365.832
=0.06036335

Adobe Systems Inc's return on assets of this year was 0.02761525. Adobe Systems Inc's return on assets of last year was 0.06036335. ==> Last year is higher ==> Score 0.

Q4. 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 was 284. Adobe Systems Inc's current cash flow from operations was 1,150. ==> 1,150 > 284 ==> CFROA > ROA ==> Score 1.

Funding

Q5. 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)=Long-Term Debt/Total Assets
=896.551/10372.199
=0.08643789

Gearing (Last Year)=Long-Term Debt/Total Assets
=1505.56/10280.369
=0.14645

Adobe Systems Inc's gearing of this year was 0.08643789. Adobe Systems Inc's gearing of last year was 0.14645. ==> This year is lower or equal to last year. ==> Score 1.

Q6. 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)=Total Current Assets/Total Current Liabilities
=4114.343/2217.972
=1.85500223

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=4557.657/1264.855
=3.60330394

Adobe Systems Inc's current ratio of this year was 1.85500223. Adobe Systems Inc's current ratio of last year was 3.60330394. ==> Last year's current ratio is higher ==> Score 0.

Q7. 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 506.7. Adobe Systems Inc's number of shares in issue last year was 512.4. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Q8. 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)=Gross Profit/Revenue
=3507.141/4105.146
=0.85432796

Gross Margin (Last Year)=Gross Profit/Revenue
=3715.866/4252.43
=0.87382179

Adobe Systems Inc's gross margin of this year was 0.85432796. Adobe Systems Inc's gross margin of last year was 0.87382179. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (May13)
=4105.146/10280.369
=0.39931893

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (May12)
=4252.43/9365.832
=0.45403654

Adobe Systems Inc's asset turnover of this year was 0.39931893. Adobe Systems Inc's asset turnover of last year was 0.45403654. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+1+0+1+0+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

Adobe Systems Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.


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

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
Q1 1111111111
Q2 1111111111
Q3 1100101000
Q4 1111111111
Q5 1111000111
Q6 1110101110
Q7 0001111110
Q8 1101110100
Q9 0010101000
F-score 7766857764

Adobe Systems Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Q1 1111111111
Q2 1111111111
Q3 0000000000
Q4 1111111111
Q5 1111111111
Q6 0011110000
Q7 1100000001
Q8 1000000000
Q9 1110000000
F-score 7665554445
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