Adobe Systems Incorporated (ADBE)

Cash conversion cycle

		Mar 1, 2024	Dec 1, 2023	Sep 1, 2023	Mar 3, 2023	Dec 2, 2022	Sep 2, 2022	Jun 3, 2022	Mar 4, 2022	Dec 3, 2021	Sep 3, 2021	Jun 4, 2021	Mar 5, 2021	Nov 27, 2020	Aug 28, 2020	May 29, 2020	Feb 28, 2020	Nov 29, 2019	Aug 30, 2019	May 31, 2019	Mar 1, 2019
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	37.97	42.46	36.49	—	42.91	—	—	—	43.43	—	—	—	39.65	38.68	41.52	43.51	49.99	46.98	45.99	—
Number of days of payables	days	46.16	48.77	50.67	50.62	63.90	54.82	65.97	55.79	61.06	67.65	65.22	54.00	64.86	47.87	60.80	56.01	45.62	43.22	42.31	39.78
Cash conversion cycle	days	-8.20	-6.31	-14.17	-50.62	-20.98	-54.82	-65.97	-55.79	-17.64	-67.65	-65.22	-54.00	-25.21	-9.19	-19.28	-12.50	4.37	3.76	3.68	-39.78

March 1, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 37.97 – 46.16
= -8.20

The cash conversion cycle of Adobe Systems Incorporated fluctuated over the analyzed periods, showing both positive and negative values. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Negative values of the cash conversion cycle indicate that Adobe Systems Incorporated is efficient in managing its working capital. Specifically, it suggests that the company is able to collect cash from customers before paying its suppliers and therefore operates with a net inflow of funds.

The data reveals that Adobe Systems Incorporated experienced a sharp decline in its cash conversion cycle from positive values to negative values from Sep 1, 2023, to Mar 1, 2029. This indicates an improvement in the company's ability to manage its working capital efficiently during this period.

However, there are instances of the cash conversion cycle increasing from negative to positive values, such as from Mar 4, 2022, to Sep 3, 2021, and from Aug 30, 2019, to May 31, 2019. Such increases may suggest that the company took longer to collect cash from customers compared to paying its suppliers, leading to a net outflow of funds during those periods.

Overall, the analysis of Adobe Systems Incorporated's cash conversion cycle reflects fluctuations in its working capital management efficiency over the analyzed periods, with periods of both strong efficiency and potential challenges in working capital management.