Adobe Inc. (NASDAQ:ADBE)

The financial ratios presented demonstrate varying trends over the observed period. Generally, adjusted ratios show a more stable progression than reported ratios, suggesting the adjustments mitigate some year-to-year volatility. Several key areas exhibit notable shifts, particularly in asset utilization, liquidity, leverage, and profitability.

Asset Turnover

Both reported and adjusted total asset turnover ratios exhibit an increasing trend. Reported turnover rose from 0.53 to 0.71, then to 0.81, indicating improving efficiency in asset utilization. The adjusted ratio follows a similar pattern, increasing from 0.57 to 0.90. The adjusted ratio consistently remains higher than the reported ratio, suggesting the adjustments account for factors that enhance asset efficiency.

Liquidity

The reported current ratio shows fluctuation, initially decreasing from 1.48 to 1.11, then increasing to 1.34 before declining to 1.07 and finally to 1.00. This suggests varying short-term liquidity positions. In contrast, the adjusted current ratio demonstrates a more substantial initial decrease from 4.34 to 3.19, followed by an increase to 4.60, and then a decline to 2.56 and 3.09. The significant difference between reported and adjusted current ratios highlights the impact of the adjustments on perceived liquidity.

Leverage

Reported debt to equity and debt to capital ratios initially decreased, then increased in later periods. Reported debt to equity moved from 0.31 to 0.22, then rose to 0.40 and 0.53. The adjusted ratios show a similar, though less pronounced, pattern. Reported financial leverage also increased from 1.83 to 2.54, indicating increasing use of financial leverage. Adjusted financial leverage shows a more moderate increase, from 1.46 to 1.65. These trends suggest a growing reliance on debt financing.

Profitability

Reported net profit margin decreased from 40.88% to 25.85%, then increased to 30.00%. The adjusted net profit margin shows a different trend, increasing from 30.89% to 36.38%, then decreasing to 25.14% and increasing to 29.92%. The adjusted ROE and ROA also show fluctuations, with adjusted ROE increasing significantly to 44.47% and adjusted ROA increasing to 26.87% in the latest period. The divergence between reported and adjusted profitability metrics suggests the adjustments are related to non-recurring items or accounting treatments that impact reported earnings.

Overall, the trends indicate a company experiencing evolving financial performance. While asset utilization and leverage are increasing, liquidity is fluctuating. Profitability metrics are sensitive to adjustments, suggesting the reported results may not fully reflect underlying economic performance. The increasing trend in asset turnover and the significant differences between reported and adjusted ratios warrant further investigation to understand the drivers behind these changes.

The adjusted total asset turnover ratio demonstrates a consistent upward trend over the analyzed period. Beginning at 0.57 in 2020, the ratio increased to 0.90 in 2025, indicating improving efficiency in asset utilization to generate revenue.

Overall Trend

A clear positive trend is observed in the adjusted total asset turnover ratio. The ratio increased each year, with the most significant jump occurring between 2024 and 2025, moving from 0.76 to 0.90. This suggests a strengthening ability to generate sales from its asset base.

Year-over-Year Changes

From 2020 to 2021, the adjusted total asset turnover increased by 0.08, representing a 14.04% rise. The increase from 2021 to 2022 was smaller, at 0.04, or 6.15%. The rate of increase slowed further from 2022 to 2023 (0.01, or 1.45%), but then accelerated again from 2023 to 2024 (0.06, or 8.57%) and significantly from 2024 to 2025 (0.14, or 18.42%).

Comparison to Reported Ratio

The adjusted total asset turnover ratio is consistently higher than the reported total asset turnover ratio across all years. The difference between the two ratios varies, but generally remains within a range of 0.02 to 0.06. This indicates that adjustments made to revenue and total assets positively impact the asset turnover calculation, suggesting the reported figures may not fully reflect operational efficiency.

Revenue and Asset Relationship

Adjusted revenue increased steadily throughout the period, from US$13,126 million in 2020 to US$24,540 million in 2025. Adjusted total assets also increased, but at a slower rate, rising from US$22,935 million to US$27,323 million over the same timeframe. The combination of increasing revenue and relatively stable assets contributes to the observed increase in the adjusted total asset turnover ratio.

The consistent growth in the adjusted total asset turnover ratio suggests effective management of assets and a growing ability to translate investments into sales. The accelerating trend in recent years warrants further investigation to understand the drivers behind this improvement.

The adjusted current ratio exhibits considerable fluctuation over the observed period. Initially high, the ratio decreased before increasing again, followed by another decline and a subsequent recovery. This suggests a dynamic relationship between adjusted current assets and adjusted current liabilities, potentially influenced by strategic financial management or external economic factors.

Overall Trend

The adjusted current ratio began at 4.34 in 2020, decreased to 3.95 in 2021, and further declined to 3.19 in 2022. A significant increase to 4.60 was observed in 2023, but this was followed by a decrease to 2.56 in 2024. The most recent period, 2025, shows a partial recovery to 3.09.

Adjusted Current Assets and Liabilities

Adjusted current assets generally increased from 2020 to 2023, peaking at US$11,100 million, before decreasing in the subsequent two years. Adjusted current liabilities demonstrated a different pattern, increasing steadily from US$1,883 million in 2020 to US$2,831 million in 2022, then decreasing to US$2,414 million in 2023. A substantial increase to US$4,390 million was recorded in 2024, followed by a decrease to US$3,295 million in 2025. These movements in both components contribute to the observed fluctuations in the adjusted current ratio.

Comparison to Reported Current Ratio

The adjusted current ratio consistently presents a significantly different picture than the reported current ratio. The reported current ratio remained below 1.50 throughout the period, indicating potential short-term liquidity concerns based on standard calculations. The adjustments made to both current assets and liabilities result in a substantially higher ratio, suggesting that the standard calculation may not fully reflect the company’s true liquidity position. The divergence between the two ratios highlights the importance of understanding the nature of the adjustments being made.

The most recent year, 2025, shows a moderate improvement in the adjusted current ratio compared to 2024, but it remains below the levels observed in 2020 and 2023. Continued monitoring of both adjusted current assets and adjusted current liabilities is recommended to understand the drivers of these fluctuations and assess the company’s short-term liquidity position.

The adjusted debt to equity ratio demonstrates a fluctuating pattern over the observed period. Initially, the ratio exhibited a decline, followed by an increase in later years. Total debt and stockholders’ equity both generally increased over the period, though not consistently, influencing the ratio’s movement.

Adjusted Debt to Equity Ratio - Overall Trend

The adjusted debt to equity ratio began at 0.30 in 2020 and decreased to 0.19 by 2022. A subsequent increase was observed, reaching 0.32 in 2024 and further rising to 0.40 in 2025. This indicates a growing reliance on debt financing relative to equity over the latter part of the period.

Adjusted Debt

Adjusted total debt increased from US$4,708 million in 2020 to US$6,648 million in 2025. The increase was not linear, with a decrease observed between 2020 and 2022 before resuming an upward trajectory. The largest single-year increase occurred between 2023 and 2024, rising from US$4,080 million to US$6,056 million.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity showed an initial increase from US$15,684 million in 2020 to a peak of US$21,308 million in 2023. However, it then decreased to US$16,511 million in 2025. This decrease in equity, coupled with increasing debt, contributed to the rising adjusted debt to equity ratio in the most recent years.

Comparison to Reported Debt to Equity

The adjusted debt to equity ratio consistently differed from the reported debt to equity ratio. The adjusted ratio was generally higher than the reported ratio in the earlier years (2020-2022) but converged towards similar values in the later years (2023-2025). This suggests that the adjustments made to debt and equity have a diminishing impact on the overall ratio as time progresses.

The observed increases in adjusted debt, combined with the recent decline in adjusted stockholders’ equity, warrant further investigation to understand the underlying drivers and potential implications for the company’s financial risk profile.

The adjusted debt to capital ratio exhibited fluctuations over the observed period. Initially, the ratio decreased from 0.23 in 2020 to 0.20 in both 2021 and 2022, indicating a strengthening capital structure relative to debt. A subsequent decline to 0.16 in 2023 suggested further improvement in this regard. However, the ratio began to increase in 2024, reaching 0.24, and continued to rise to 0.29 in 2025, signaling a growing reliance on debt financing relative to capital.

Total Debt

Total debt remained relatively stable between 2020 and 2022, fluctuating around US$4.1 billion. A decrease was observed in 2023, falling to US$3.63 billion, before increasing significantly to US$5.63 billion in 2024 and further to US$6.21 billion in 2025. This recent increase suggests a deliberate strategy to leverage debt, or potentially fund acquisitions or share repurchases.

Total Capital

Total capital generally trended upward from 2020 to 2023, increasing from US$17.38 billion to US$25.39 billion. A slight decrease to US$24.81 billion occurred in 2024, followed by a more pronounced decline to US$23.16 billion in 2025. This decrease in capital, concurrent with rising debt, contributes to the increasing adjusted debt to capital ratio.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio provides a refined view of the company’s financial leverage. The initial decline from 0.23 to 0.20 between 2020 and 2022 indicates improved financial health. The ratio’s low point of 0.16 in 2023 suggests a strong capital position. The subsequent increases in 2024 and 2025, reaching 0.29, warrant further investigation to understand the drivers behind the increased leverage. The difference between the reported and adjusted ratios suggests that adjustments to debt and capital calculations are materially impacting the leverage picture.

The observed trend in the adjusted debt to capital ratio suggests a shift in the company’s financial strategy. While the initial period demonstrated a strengthening capital structure, the more recent increases in debt and decreases in capital indicate a growing reliance on debt financing. Continued monitoring of these trends is recommended to assess the long-term implications for the company’s financial stability.

An examination of the financial information reveals trends in adjusted financial leverage over a six-year period. Reported financial leverage exhibits more volatility than adjusted financial leverage, suggesting the adjustments are smoothing out certain balance sheet fluctuations. Overall, adjusted financial leverage demonstrates a generally increasing trend, though with some year-to-year variation.

Adjusted Financial Leverage – Trend Analysis

Adjusted financial leverage decreased from 1.46 in 2020 to 1.41 in both 2021 and 2022. A further decrease was observed in 2023, falling to 1.34. However, the ratio increased to 1.52 in 2024 before rising again to 1.65 in 2025. This indicates a period of deleveraging followed by a resumption of increased leverage.

Relationship between Adjusted and Reported Leverage

Reported financial leverage fluctuated more significantly. It began at 1.83 in 2020, rose to 1.84 in 2021, then increased to 1.93 in 2022. A decrease to 1.80 was noted in 2023, followed by increases to 2.14 in 2024 and 2.54 in 2025. The divergence between reported and adjusted leverage suggests that the adjustments relate to items impacting assets or equity that are not consistently reflected in the reported figures.

Asset and Equity Adjustments

Adjusted total assets generally tracked reported total assets, remaining relatively stable between 2020 and 2023, with a slight increase in 2024 and a decrease in 2025. Adjusted stockholders’ equity showed a consistent increase from US$15,684 million in 2020 to US$21,308 million in 2023, before decreasing to US$18,752 million in 2024 and further to US$16,511 million in 2025. The changes in adjusted equity appear to be a significant driver of the fluctuations in adjusted financial leverage.

The increasing adjusted financial leverage in the later years of the period warrants further investigation to understand the underlying causes and potential implications for the company’s financial risk profile. The adjustments made to both assets and equity appear to be material and influence the overall leverage picture.

The adjusted net profit margin exhibited fluctuations over the observed period. Initially, an increase is noted, followed by periods of decline and subsequent recovery. A detailed examination of the trends reveals key insights into the company’s profitability performance.

Overall Trend

From November 27, 2020, to November 29, 2024, the adjusted net profit margin generally decreased. However, a significant increase is observed between November 29, 2024, and November 28, 2025, indicating a potential turnaround in profitability.

Initial Increase (2020-2021)

The adjusted net profit margin increased from 30.89% in 2020 to 36.38% in 2021. This improvement suggests enhanced operational efficiency or favorable pricing dynamics during this period. The adjusted net income grew at a faster rate than the adjusted revenue.

Subsequent Decline (2021-2024)

Following the peak in 2021, the adjusted net profit margin experienced a decline, reaching 25.14% in 2024. This decrease could be attributed to rising costs, increased competition, or changes in the company’s product mix. While adjusted revenue continued to grow, the adjusted net income did not increase at the same pace.

Recent Recovery (2024-2025)

The most recent period shows a notable recovery, with the adjusted net profit margin rising to 29.92% in 2025. This suggests that the company may have implemented successful cost-control measures or benefited from improved market conditions. The adjusted net income increased at a faster rate than the adjusted revenue in this period.

Comparison with Reported Margin

The adjusted net profit margin consistently differs from the reported net profit margin across all observed periods. This indicates the presence of adjustments made to net income and/or revenue, which impact the reported profitability figures. The adjustments appear to lower the reported margin compared to the adjusted margin.

In conclusion, the adjusted net profit margin demonstrates a complex pattern of growth, decline, and recovery. The recent improvement in 2025 is a positive sign, but continued monitoring is necessary to assess the sustainability of this trend.

The adjusted return on equity (ROE) exhibited fluctuations over the observed period. Initially, the adjusted ROE stood at 25.85% in 2020, increased to 33.04% in 2021, then decreased to 29.19% in 2022, followed by a further decline to 26.01% in 2023. A modest increase to 29.24% was noted in 2024, culminating in a substantial rise to 44.47% in 2025.

Adjusted Net Income Trend

Adjusted net income demonstrated an initial decrease from 4,055 million in 2020 to 6,149 million in 2021, followed by a decrease to 5,469 million in 2022, a slight increase to 5,543 million in 2023, a slight decrease to 5,483 million in 2024, and a significant increase to 7,342 million in 2025. This trend largely mirrors the fluctuations observed in the adjusted ROE.

Adjusted Stockholders’ Equity Trend

Adjusted stockholders’ equity generally increased from 15,684 million in 2020 to 18,611 million in 2021, then to 18,739 million in 2022, and further to 21,308 million in 2023. A decrease to 18,752 million was observed in 2024, followed by a further decrease to 16,511 million in 2025. The increase in equity from 2020 to 2023 likely contributed to the initial rise in adjusted ROE, while the subsequent decreases in equity from 2024 to 2025, coupled with increasing net income, drove the substantial increase in adjusted ROE in 2025.

The relationship between adjusted net income and adjusted stockholders’ equity suggests that changes in both components influenced the adjusted ROE. The significant increase in adjusted ROE in 2025 appears to be driven by a combination of increased adjusted net income and decreased adjusted stockholders’ equity. The period between 2020 and 2023 shows a more balanced relationship, with both components contributing to the observed fluctuations.

Comparison to Reported ROE

The adjusted ROE consistently differed from the reported ROE throughout the period. The adjustments made to net income and stockholders’ equity resulted in lower ROE values in 2020, 2021, 2022, and 2023, but the difference narrowed in 2024 and 2025. This indicates that the adjustments had a more pronounced effect on the ROE calculation in the earlier years of the observed period.

The adjusted return on assets (ROA) exhibited considerable fluctuation over the observed period. Initially, the adjusted ROA decreased from 17.68% in 2020 to 17.51% in 2022, before experiencing a moderate increase to 19.38% in 2023 and 19.18% in 2024. A significant surge is then observed, with the adjusted ROA reaching 26.87% in 2025.

Adjusted ROA Trend

From 2020 to 2022, the adjusted ROA experienced a slight decline, suggesting a potential decrease in the efficiency of asset utilization in generating profit after adjustments. The subsequent stabilization in 2023 and 2024 indicates a period of consolidation. The substantial increase in 2025 suggests improved profitability relative to asset base following adjustments.

Relationship to Reported ROA

The adjusted ROA consistently falls below the reported ROA across all observed years. This difference indicates that adjustments to net income and total assets have a material downward impact on the calculated return. The magnitude of this difference varies year to year, suggesting the impact of these adjustments is not constant.

Adjusted Net Income and Assets

Adjusted net income increased from US$4,055 million in 2020 to US$7,342 million in 2025, demonstrating an overall upward trend. Adjusted total assets also increased over the period, moving from US$22,935 million in 2020 to US$27,323 million in 2025, though the rate of increase was not consistent. The larger increase in adjusted net income relative to adjusted total assets in 2025 likely contributed to the significant rise in adjusted ROA.

The observed trend in adjusted ROA suggests that while the company demonstrates overall profitability, the reported figures are impacted by adjustments that reduce the apparent efficiency of asset utilization. The substantial increase in adjusted ROA in the final year warrants further investigation to understand the drivers behind the improved performance following adjustments.