Adobe Systems Incorporated (ADBE)
Profitability ratios
Return on sales
| Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 87.87% | 87.70% | 88.18% | 86.62% | 85.02% |
| Operating profit margin | 34.26% | 34.64% | 36.76% | 32.93% | 29.25% |
| Pretax margin | 35.03% | 34.12% | 36.14% | 32.45% | 28.69% |
| Net profit margin | 27.97% | 27.01% | 30.55% | 40.88% | 26.42% |
Adobe Inc's profitability ratios, as indicated by the gross profit margin, operating profit margin, pretax margin, and net profit margin, provide insight into the company's ability to generate profits from its operations. Here's a detailed analysis of these ratios over the past five years:
Gross Profit Margin:
The gross profit margin measures the percentage of revenue that exceeds the cost of goods sold. Adobe Inc has maintained a consistently high gross profit margin, ranging from 85.03% to 88.18% over the past five years. This indicates strong pricing power and efficient cost control in the production of their software products.
Operating Profit Margin:
The operating profit margin, which reveals the percentage of revenue remaining after deducting operating expenses, shows a slight fluctuation over the period. Despite this fluctuation, Adobe Inc has maintained a healthy operating profit margin, ranging from 29.25% to 36.76%, signaling the company's ability to effectively manage its operating costs and generate profit from core business activities.
Pretax Margin:
The pretax margin indicates the company's ability to generate profit before accounting for taxes. Adobe Inc's pretax margin has also exhibited stability, ranging from 28.69% to 36.14% over the five-year period. This consistency indicates effective cost control and revenue management strategies.
Net Profit Margin:
The net profit margin measures the percentage of revenue that translates into net income for the company. Adobe Inc's net profit margin has displayed variability, ranging from 26.42% to 40.88%. The dip in 2018 could be due to a specific event or accounting adjustment. However, the overall trend suggests the company's ability to convert a significant portion of its revenue into profit.
In summary, Adobe Inc's profitability ratios reflect strong performance, with consistently high gross profit margins, healthy operating and pretax margins, and a generally favorable net profit margin. These ratios indicate efficient cost management, robust revenue generation, and effective profitability in its core business activities.
Return on investment
| Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | Nov 29, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 22.33% | 22.45% | 21.30% | 17.45% | 15.74% |
| Return on assets (ROA) | 18.23% | 17.51% | 17.70% | 21.66% | 14.21% |
| Return on total capital | 41.85% | 43.56% | 39.32% | 32.36% | 31.93% |
| Return on equity (ROE) | 32.86% | 33.85% | 32.59% | 39.66% | 28.02% |
Based on the profitability ratios for Adobe Inc, we can see a consistent trend of strong performance over the past five years.
Starting with Operating Return on Assets (Operating ROA), which measures the company's operating income generated per dollar of assets, we observe a steady increase from 15.74% in 2019 to 22.33% in 2023. This indicates that Adobe has been able to generate more operating income from its assets over the years.
The Return on Assets (ROA) also demonstrates a positive trend, albeit with some fluctuations. This ratio reveals the company's ability to generate profits from its total assets, and although there were some variations, the general performance has been strong, with a decrease in 2022 followed by an increase in 2023 to 18.23%.
Further, the Return on Total Capital ratio, which assesses the overall returns generated from the total capital invested in the business, also exhibits an increasing trend from 22.28% in 2019 to 33.00% in 2023. This indicates that Adobe has been able to effectively utilize its total capital to generate increased returns.
Finally, the Return on Equity (ROE), which illustrates the profitability of the company from the perspective of its shareholders' equity, shows a consistent and strong performance, with a slight increase from 28.03% in 2019 to 32.86% in 2023.
Overall, these profitability ratios reflect positively on Adobe Inc's ability to efficiently use its assets and capital to generate profits, ultimately providing healthy returns to its shareholders. This consistent improvement in profitability ratios suggests effective management and operational efficiency within the company.