IBM Financial Statements and Financial Ratios Analyzed from 2015 to 2019

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Hey All,

Thanks for visiting my IBM Financial Report page. On this page, you will be able to find preliminary information about IBM's current financial performance as well as some historical track records and trends. 

For a more detailed examination of IBM's financial performance, please check out the "Financial Report".  In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
  • Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is were I use plain English to explain concepts.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul MBA.

IBM Financial Report by Paul Borosky, MBA.
  • Free Bonus Downloads: Annual Statements for the Last Five Years (10k reports)!

Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

IBM: Brief Summary

IBM has its headquarters at 1 New Orchard Rd. in Armonk, New York.  The company competes in the information technology services segment of the US and global industry.  As for the specific sector, the company claims to compete in the technology segment.  At present, IBM employs approximately 350,000 individuals.

As for a current financial perspective, the company’s 52-week stock range has been between $90-$158.  The firm’s beta is 1.27.  This indicates that the company has a slightly higher risk as compared to the overall market.  The firm has reached a market cap of $105 billion.  Finally, the firm does pay dividends quarterly.

IBM Financial Report Sources

“IBM 2019 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan.  In this book, the author selected IBM's 2019 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and IBM's 2019 10k annual report as the basis for information gathering. 

Section 1: IBM Income Statement Analyzed 2015 to 2019

In this section, I walk through a broad definition as to what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of IBM’s important income statement line item trends from 2015 to 2019, in most cases.

IBM Revenue Growth.

In the last five years, the company has gone from $81.7 billion in revenues to 77.1 billion.  This continuous drop in revenues shows that the firm may not be as innovative as other organizations competing in the technology sector.  To mitigate this issue, IBM may consider acquiring cutting-edge startups.  Or, the firm may use its resources to attract and retain higher skilled technological workers.

IBM Cost of goods sold.

IBM’s cost of goods sold, as a percentage of revenues, has gone from 50% in 2015 to 53.6% in 2018.  This indicates that either the management team is not doing as good of a job negotiating raw material costs.  Or, the organization is not able to pass on the increased cost to consumers because of elevated industry competition.  Fortunately, though, in 2019, the cost of goods as compared to revenues did fall slightly to 52.7%.

IBM Income Statement Summary 2019

Column1 2019 2018 2017 2016 2015
Revenues                    77,147                    79,591                    79,139                    79,919                      81,741
COGS                    40,659                    42,655                    42,196                    41,403                      41,057
Gross Profit                    36,488                    36,936                    36,943                    38,516                      40,684
SG&A                    20,604                    19,366                    19,680                    20,869                      20,430
Depreciation                            -                            -                            -                            -                             -
R & D                      5,989                      5,379                      5,590                      5,726                        5,247
Other
Operating Expenses                    26,322                    25,594                    25,543                    26,186                      24,750
EBIT                    10,166                    10,619                    10,785                    11,700                      15,477
Other Income                            -                            -                            -                            -                             -
Interest Expense                      1,344                         723                         615                         630                           468
EBT                      8,822                    11,342                    11,400                    12,330                      15,945
Taxes                         731                      2,619                      5,642                         449                        2,581
Net Income                     9,431                     8,723                     5,758                   11,881                    13,190

Section 2: IBM Balance Sheet Analyzed from 2015 to 2019

For IBM's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define IBM’s balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer an analysis of IBM’s balance sheet important line items.

IBM Cash Position.

IBM’s cash position slightly increased from 2015 to 2019.  In 2015, the cash position was $7.6 billion.  In 2018, this increased substantially to 11.4 billion.  However, there was a slight decrease in 2019 to 8.1 billion.  A hefty cash position may be needed for this organization due to its continued decline in revenues.  By holding a significant cash position, the firm can show liquidity in short to moderate term.  The strategy should be upheld for the foreseeable future.

IBM Accounts receivable.

IBM has done an excellent job of keeping their accounts receivable at approximately 10% of sales.  This shows that the firm has optimized its collection procedures to ensure timely payments by vendors.  However, the company may wish to loosen its credit policies.  By doing this, the firm may be able to generate additional revenues for the organization.

IBM Summary Balance Sheet 2019

Column1 2019 2018 2017 2016 2015
Cash                        8,172                  11,379                  11,972                    7,826                    7,686
Short Term Investment                           696                       618                       608                       701                       508
Account Receivable                        7,870                    7,432                    8,928                    9,182                    8,333
Inventory                        1,619                    1,682                    1,583                    1,553                    1,551
Other
Current Assets                    38,420                49,146                49,735                43,888                42,504
Net PPE                      10,010                  10,792                  11,116                  10,830                  10,727
Goodwill                      58,222                  36,265                  36,788                    4,688                    3,487
Other                         -                         -                         -                         -
Total Assets                  152,186              123,382              125,356              117,470              110,495
Accounts Payable                        4,896                    6,558                    6,451                    6,209                    6,028
Accrued Expense                        4,357                    3,310                    3,644                    3,577                    3,560
Accrued Taxes                        2,839                    3,046                    4,219                    3,235                    2,847
Notes Payable                        8,797                  10,207                    6,987                    7,513                    6,461
LT Debt - Current                         -                         -                         -                         -
Other                         -                         -                         -                         -
Total Current Liabilities                      37,701                  38,227                  37,363                  36,275                  34,269
LT Debt                      54,102                  35,605                  39,837                  34,655                  33,428
Other
Total Liabilities                  131,202              106,452              107,631                99,078                96,071
Common Stock                      55,895                  55,151                  54,566                  53,935                  53,262
Treasury                    169,413                168,071                163,507                159,050                155,518
Retained Earnings                    162,954                159,206                153,126                152,759                146,124
Other                              -                         -                         -                         -                         -
Total Equity                    20,985                16,929                17,725                18,392                14,424
Total Equity & Liability                  152,186              123,382              125,356              117,470              110,495

Section 3: IBM Financial Ratios Analyzed from 2015 to 2019

For this final section, I have chosen about 16 different financial ratios to calculate for IBM from 2015 to 2019.  I also review some important IBM's financial ratios. I first start with defining the financial ratio.  Next, I supply the financial formulas for calculating the specific ratio.  Finally, I offer a brief analysis of important financial ratios.

IBM Current Ratio.

IBM’s current ratio ended in 2015 at 1.24.  In the next five years, their current ratio would fall to 1.02 and 2019.  As noted previously, the gold standard for the current ratio is 1.0.  By bringing their current ratio in line with the standard, the company is telling investors that they have enough funds to be solving for short to moderate term.  Further, this also indicates to investors that the company is attempting to better optimize the usage of cash by only holding enough funds to cover annual expenses.

IBM Total Asset Turnover.

IBM’s total asset turnover ended 2015.74.  As of 2019, their total asset turnover fell to .51.  This shows that the company is continually underutilizing their total assets.  To mitigate this issue, the firm may wish to divest or sell underperforming assets or buildings that are not optimally used.  Also, reducing their cash position to slightly below 1.0 as a current ratio could assist in improving the total asset turnover for the organization.

IBM Return on Equity.

As with most mature companies, IBM has taken on substantial debt to drive up there return on equity.  In 2015, the company’s return on equity was a mind-blowing 91.4%.  In the next five years, the return on equity would fall to 44.9%.  Regardless, for a company that has sales falling continuously, this is still an above-average return on equity for the industry sector.  Unfortunately, though, if the company is not using equity to finance growth, then they are using debt.  With debt comes elevated risk from the leverage.

IBM Debt ratio.

The company’s debt ratio in 2015 was approximately 30%.  In the next five years, the debt ratio would climb to 35.5%.  When a company has increased debt and falling revenues, this indicates that the strategy cannot go on forever.  There’s just no way for a company to be able to handle increased debt payments while the revenues are falling off.  Because of this, the executive team needs to shift strategies to focus more on equity financing and growth as compared to utilizing leverage to elevate return on equity performances.

IBM 2019 Liquidity Ratios

Ratios 2019 2018 2017 2016 2015
Current Ratio                           1.02                    1.29
Cash Ratio                           0.22                    0.30
Quick Ratio                           0.98                    1.24
Net Working Capital                         5,569                  7,579

IBM 2019 Asset Utilization

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           0.51                    0.65
Fixed Asset Turnover                           7.71                    7.38
Days Sales Outstanding                         37.23                  34.08
Inventory Turnover                         47.65                  47.32
Accounts Receivable Turnover                           9.80                  10.71
Working Capital Turnover                         13.85                  10.50
AP Turnover                         15.76                  12.14
Average Days Inventory                           0.13                    0.13
Average Days Payable                           0.04                    0.03

IBM 2019 Profitability Ratios

Ratios 2019 2018 2017 2016 2015
Return on Assets 6.20% 7.07%
Return on Equity 44.94% 51.53%
Net Profit Margin 12.22% 10.96%
Gross Profit Margin 47.30% 46.41%
Operating Profit Margin 13.18% 13.34%
Basic Earning Power 6.68% 8.61%
ROCE 8.88% 12.47%
Capital Employed                     114,485                85,155
ROIC 59.85% 44.46%

IBM 2019 Long-term Debt

Ratios 2019 2018 2017 2016 2015
Debt Ratio 35.55% 28.86%
Debt/Equity 257.81% 210.32%
Times Interest Earned                           7.56                  14.69