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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 (Feb15) TTM:Last Year (Feb14) TTM:
Net Income was 88.527 + 44.686 + 88.136 + 84.888 = $306 Mil.
Cash Flow from Operations was 367.536 + 268.52 + 399.753 + 183.015 = $1,219 Mil.
Revenue was 1068.208 + 1005.409 + 1073.328 + 1109.181 = $4,256 Mil.
Gross Profit was 913.304 + 847.685 + 912.385 + 942.383 = $3,616 Mil.
Average Total Assets from the begining of this year (Feb14)
to the end of this year (Feb15) was
(10245.882 + 10372.199 + 10493.68 + 10785.829 + 11008.422) / 5 = $10581.2024 Mil.
Total Assets at the begining of this year (Feb14) was $10,246 Mil.
Long-Term Debt was $1,902 Mil.
Total Current Assets was $3,972 Mil.
Total Current Liabilities was $1,788 Mil.
Net Income was 76.546 + 83.002 + 65.32 + 47.046 = $272 Mil.

Revenue was 1010.549 + 995.119 + 1041.699 + 1000.12 = $4,047 Mil.
Gross Profit was 875.268 + 848.043 + 894.183 + 851.611 = $3,469 Mil.
Average Total Assets from the begining of last year (Feb13)
to the end of last year (Feb14) was
(10165.711 + 10280.369 + 10234.156 + 10380.298 + 10245.882) / 5 = $10261.2832 Mil.
Total Assets at the begining of last year (Feb13) was $10,166 Mil.
Long-Term Debt was $896 Mil.
Total Current Assets was $3,942 Mil.
Total Current Liabilities was $2,112 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 306. ==> 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 1,219. ==> 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 (Feb14)
=306.237/10245.882
=0.02988879

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Feb13)
=271.914/10165.711
=0.02674815

Adobe Systems Inc's return on assets of this year was 0.02988879. Adobe Systems Inc's return on assets of last year was 0.02674815. ==> 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 306. Adobe Systems Inc's current cash flow from operations (TTM) was 1,219. ==> 1,219 > 306 ==> 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: Feb15)=Long-Term Debt/Average Total Assets from Feb14 to Feb15
=1901.554/10581.2024
=0.17971058

Gearing (Last Year: Feb14)=Long-Term Debt/Average Total Assets from Feb13 to Feb14
=896.418/10261.2832
=0.08735925

Adobe Systems Inc's gearing of this year was 0.17971058. Adobe Systems Inc's gearing of last year was 0.08735925. ==> 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: Feb15)=Total Current Assets/Total Current Liabilities
=3972.159/1788.16
=2.22136666

Current Ratio (Last Year: Feb14)=Total Current Assets/Total Current Liabilities
=3942.391/2112.347
=1.86635576

Adobe Systems Inc's current ratio of this year was 2.22136666. Adobe Systems Inc's current ratio of last year was 1.86635576. ==> 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 507.5. Adobe Systems Inc's number of shares in issue last year was 508.3. ==> 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
=3615.757/4256.126
=0.84954181

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3469.105/4047.487
=0.85710096

Adobe Systems Inc's gross margin of this year was 0.84954181. Adobe Systems Inc's gross margin of last year was 0.85710096. ==> 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 (Feb14)
=4256.126/10245.882
=0.41539869

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Feb13)
=4047.487/10165.711
=0.3981509

Adobe Systems Inc's asset turnover of this year was 0.41539869. Adobe Systems Inc's asset turnover of last year was 0.3981509. ==> 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

Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000001
Question 4 1111111111
Question 5 1111111110
Question 6 1110000001
Question 7 0000001111
Question 8 0000000000
Question 9 0000000001
F-score 5554445557
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