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Adobe (ADBE) Altman Z-Score : 12.69 (As of May. 27, 2024)


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What is Adobe Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Good Sign:

Altman Z-score of 12.7 is strong.

Adobe has a Altman Z-Score of 12.69, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Adobe's Altman Z-Score or its related term are showing as below:

ADBE' s Altman Z-Score Range Over the Past 10 Years
Min: 6.76   Med: 10.53   Max: 18.77
Current: 12.7

During the past 13 years, Adobe's highest Altman Z-Score was 18.77. The lowest was 6.76. And the median was 10.53.


Adobe Altman Z-Score Historical Data

The historical data trend for Adobe's Altman Z-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Adobe Altman Z-Score Chart

Adobe Annual Data
Trend Nov14 Nov15 Nov16 Nov17 Nov18 Nov19 Nov20 Nov21 Nov22 Nov23
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 10.73 14.85 17.93 10.18 15.68

Adobe Quarterly Data
May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 10.19 11.80 14.52 15.68 14.54

Competitive Comparison of Adobe's Altman Z-Score

For the Software - Infrastructure subindustry, Adobe's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Adobe's Altman Z-Score Distribution in the Software Industry

For the Software industry and Technology sector, Adobe's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Adobe's Altman Z-Score falls into.



Adobe Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

Adobe's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.0164+1.4*1.1759+3.3*0.2183+0.6*16.0253+1.0*0.6934
=12.69

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Feb. 2024:
Total Assets was $28,751 Mil.
Total Current Assets was $10,008 Mil.
Total Current Liabilities was $9,537 Mil.
Retained Earnings was $33,809 Mil.
Pre-Tax Income was 968 + 1808 + 1743 + 1650 = $6,169 Mil.
Interest Expense was -27 + -28 + -27 + -26 = $-108 Mil.
Revenue was 5182 + 5048 + 4890 + 4816 = $19,936 Mil.
Market Cap (Today) was $212,993 Mil.
Total Liabilities was $13,291 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(10008 - 9537)/28751
=0.0164

X2=Retained Earnings/Total Assets
=33809/28751
=1.1759

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(6169 - -108)/28751
=0.2183

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=212992.640/13291
=16.0253

X5=Revenue/Total Assets
=19936/28751
=0.6934

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Adobe has a Altman Z-Score of 12.69 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Adobe  (NAS:ADBE) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Adobe Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Adobe's Altman Z-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Adobe (ADBE) Business Description

Address
345 Park Avenue, San Jose, CA, USA, 95110-2704
Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers for creating, managing, delivering, measuring, optimizing and engaging with compelling content multiple operating systems, devices and media. The company operates with three segments: digital media content creation, digital experience for marketing solutions, and publishing for legacy products (less than 5% of revenue).
Executives
Mark S. Garfield officer: VP, CAO & Corp. Controller 345 PARK AVENUE, SAN JOSE CA 95110-2704
Amy Banse director 345 PARK AVENUE, SAN JOSE CA 95110
David Wadhwani officer: SVP & GM, Digital Media ADOBE INC., 345 PARK AVE, SAN JOSE CA 95110
Shantanu Narayen director, officer: President and CEO 345 PARK AVENUE, SAN JOSE CA 95110
Daniel Durn officer: EVP and CFO C/O APPLIED MATERIALS, INC., 3050 BOWERS AVENUE, P.O. BOX 58039, SANTA CLARA CA 95052-8039
Scott Belsky officer: EVP, Chief Product Officer 345 PARK AVENUE, SAN JOSE CA 95110
Cristiano R Amon director 5775 MOREHOUSE DRIVE, SAN DIEGO CA 92121
John E Warnock director, other: Co-Chairman of the Board C/O ADOBE SYSTEMS INC, 345 PARK AVENUE P O BOX 2704, SAN JOSE CA 95110-2704
Dana Rao officer: EVP, Gen. Counsel & Secretary 345 PARK AVE, SAN JOSE CA 95110
Ann Lewnes officer: SVP, Chief Marketing Officer 345 PARK AVENUE, SAN JOSE CA 95110
David A Ricks director LILLY CORPORATE CENTER, INDIANAPOLIS IN 46285
M. Brett Biggs director 702 SW 8TH STREET, BENTONVILLE AR 72716
Laura Desmond director 345 PARK AVENUE, SAN JOSE CA 95110
Spencer Adam Neumann director SIERRA INCOME CORPORATION, 375 PARK AVE., SUITE 3304, NEW YORK NY 10152
Gloria Chen officer: EVP, Strategy & Growth 345 PARK AVENUE, SAN JOSE CA 95110

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