Adobe Systems Incorporated (ADBE)
Cash conversion cycle
| Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 41.82 | 42.91 | 43.43 | 39.65 | 49.99 |
| Number of days of payables | days | 48.69 | 63.90 | 61.06 | 64.86 | 45.60 |
| Cash conversion cycle | days | -6.86 | -20.98 | -17.64 | -25.21 | 4.39 |
December 1, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 41.82 – 48.69
= -6.86
To analyze the cash conversion cycle of Adobe Inc over the past five years, we can observe a trend of improvement in the efficiency of its working capital management. In the fiscal year ending December 1, 2023, Adobe's cash conversion cycle decreased to -6.86 days, reflecting a significant shortening of its operating cycle. This indicates that the company took less time to convert its investments in inventory and accounts receivable into cash, resulting in a more efficient use of its working capital.
Comparing this to the previous fiscal years, it is evident that Adobe has made substantial progress in optimizing its cash conversion cycle. In FY 2022, the cash conversion cycle was -21.09 days, also indicating an efficient use of working capital. The trend continued to improve in FY 2021, where the cash conversion cycle stood at -17.64 days, and in FY 2020, it was -25.21 days. Notably, in FY 2019, the cash conversion cycle was positive at 4.43 days, indicating a longer operating cycle compared to the subsequent years.
Overall, the consistent reduction in Adobe's cash conversion cycle reflects improved efficiency in managing its cash, inventory, and accounts receivable, ultimately leading to a more streamlined working capital process. This suggests that Adobe has been successful in converting its resources into cash more effectively over the years, resulting in a more efficient and liquid operating cycle.
Peer comparison
Dec 1, 2023