Industry Profiles
Software Industry DSO Improves But Liquidity Declines, Debt Rises
Dec. 28, 2009
Adobe Systems photo
The Adobe corporate office in San Jose, CA.
Adobe was founded in 1982 by Drs. John
Warnock and Charles Geschke.
Software technology companies continue to generate revenue growth even as equity capital, long a key source of liquidity for the industry, becomes more scarce.
The days' sales outstanding, a key credit benchmark that measures in days the amount of time necessary for a company to turn its revenue into cash, improved significantly by 4.71 days in 2008 from the previous year, according to the latest annualized benchmark data from the Credit Standards Index (CSI).
However, current ratio, a key measure of liquidity, declined significantly from 2.48 in 2007 to 2.15 in 2008 largely as a result of diminished equity capital and possibly a reduction in quality of revenue. Operating cash flow remained steady.
