Adobe Systems Incorporated (ADBE)
Liquidity ratios
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.07 | 1.34 | 1.11 | 1.25 | 1.48 |
| Quick ratio | 0.95 | 1.22 | 1.00 | 1.11 | 1.34 |
| Cash ratio | 0.75 | 0.95 | 0.75 | 0.84 | 1.09 |
The liquidity ratios of Adobe Systems Incorporated provide insights into the company's ability to meet its short-term financial obligations.
1. Current Ratio: Adobe's current ratio has fluctuated over the years but generally indicates the company's ability to cover its current liabilities with its current assets. The ratio decreased from 1.48 in November 2020 to 1.07 in November 2024, suggesting a slight decline in short-term liquidity. However, it remained above 1, implying that Adobe has sufficient current assets to meet its current liabilities.
2. Quick Ratio: The quick ratio, which excludes inventory from current assets, also shows a downward trend from 1.34 in December 2023 to 0.95 in November 2024. This could imply a potential challenge for Adobe in meeting its short-term obligations without relying on inventory. However, the ratio remained above 1 in most years, indicating a reasonable level of liquidity.
3. Cash Ratio: Adobe's cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, decreased from 1.09 in November 2020 to 0.75 in December 2, 2022, and November 29, 2024. This decline may suggest a lower level of immediate liquidity and the need to manage cash resources efficiently.
In summary, while Adobe Systems Incorporated has shown some fluctuations in its liquidity ratios over the years, the company generally maintains a level of liquidity that allows it to meet its short-term obligations. Management should continue monitoring these ratios to ensure efficient management of current assets and liabilities.
See also:
Additional liquidity measure
| Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -20.71 | -6.86 | -20.98 | -17.64 | -25.21 |
The cash conversion cycle is a crucial metric that provides insights into the efficiency of a company's cash management. In the case of Adobe Systems Incorporated, the trend in the cash conversion cycle over the past five years indicates a consistent improvement in efficiency.
As of November 27, 2020, the cash conversion cycle stood at -25.21 days, indicating that Adobe was able to convert its inventory into cash quickly, operate efficiently, and collect receivables promptly. This trend continued to improve over the subsequent years, with the cycle decreasing to -17.64 days by December 3, 2021, -20.98 days by December 2, 2022, -6.86 days by December 1, 2023, and finally, -20.71 days by November 29, 2024.
The negative values of the cash conversion cycle for each year suggest that Adobe Systems Incorporated has been able to manage its working capital effectively, reducing the time taken to convert inventory and receivables into cash. This efficiency indicates strong operational performance and effective liquidity management within the company.
Overall, the consistent improvement in the cash conversion cycle for Adobe Systems Incorporated reflects the company's ability to streamline its cash flow processes, optimize its working capital management, and enhance its overall financial performance.