Profitability Analysis

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).


Ratios (Summary)

International Business Machines Corp., profitability ratios

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Return on Sales
Gross profit margin 48.63% 48.13% 46.89% 46.07% 45.72%
Operating profit margin 19.65% 20.59% 20.01% 19.33% 19.00%
Net profit margin 16.52% 15.89% 14.83% 14.85% 14.02%
Return on Investment
Return on equity (ROE) 72.32% 88.04% 78.73% 64.36% 59.31%
Return on assets (ROA) 13.06% 13.93% 13.62% 13.07% 12.31%

Source: Based on data from International Business Machines Corp. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. International Business Machines Corp.'s gross profit margin improved from 2011 to 2012 and from 2012 to 2013.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. International Business Machines Corp.'s operating profit margin improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. International Business Machines Corp.'s net profit margin improved from 2011 to 2012 and from 2012 to 2013.
ROE A profitability ratio calculated as net income divided by shareholders' equity. International Business Machines Corp.'s ROE improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.
ROA A profitability ratio calculated as net income divided by total assets. International Business Machines Corp.'s ROA improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.

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Gross Profit Margin

International Business Machines Corp., gross profit margin calculation

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Gross profit 48,505  50,298  50,138  46,014  43,785 
Revenue 99,751  104,507  106,916  99,870  95,758 
Ratio
Gross profit margin1 48.63% 48.13% 46.89% 46.07% 45.72%

Source: Based on data from International Business Machines Corp. Annual Reports

2013 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 48,505 ÷ 99,751 = 48.63%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. International Business Machines Corp.'s gross profit margin improved from 2011 to 2012 and from 2012 to 2013.

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Operating Profit Margin

International Business Machines Corp., operating profit margin calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Operating income 19,599  21,517  21,394  19,305  18,190 
Revenue 99,751  104,507  106,916  99,870  95,758 
Ratio
Operating profit margin1 19.65% 20.59% 20.01% 19.33% 19.00%
Benchmarks
Operating Profit Margin, Industry
Technology 23.53% 21.45% 24.19% 23.86% 19.80%

Source: Based on data from International Business Machines Corp. Annual Reports

2013 Calculations

1 Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × 19,599 ÷ 99,751 = 19.65%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. International Business Machines Corp.'s operating profit margin improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.

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Net Profit Margin

International Business Machines Corp., net profit margin calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to IBM 16,483  16,604  15,855  14,833  13,425 
Revenue 99,751  104,507  106,916  99,870  95,758 
Ratio
Net profit margin1 16.52% 15.89% 14.83% 14.85% 14.02%
Benchmarks
Net Profit Margin, Industry
Technology 18.95% 16.59% 18.85% 18.48% 14.79%

Source: Based on data from International Business Machines Corp. Annual Reports

2013 Calculations

1 Net profit margin = 100 × Net income attributable to IBM ÷ Revenue
= 100 × 16,483 ÷ 99,751 = 16.52%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. International Business Machines Corp.'s net profit margin improved from 2011 to 2012 and from 2012 to 2013.

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Return on Equity (ROE)

International Business Machines Corp., ROE calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to IBM 16,483  16,604  15,855  14,833  13,425 
Total IBM stockholders' equity 22,792  18,860  20,138  23,046  22,637 
Ratio
ROE1 72.32% 88.04% 78.73% 64.36% 59.31%
Benchmarks
ROE, Industry
Technology 23.13% 21.80% 26.37% 25.65% 20.82%

Source: Based on data from International Business Machines Corp. Annual Reports

2013 Calculations

1 ROE = 100 × Net income attributable to IBM ÷ Total IBM stockholders' equity
= 100 × 16,483 ÷ 22,792 = 72.32%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. International Business Machines Corp.'s ROE improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.

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Return on Assets (ROA)

International Business Machines Corp., ROA calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net income attributable to IBM 16,483  16,604  15,855  14,833  13,425 
Total assets 126,223  119,213  116,433  113,452  109,022 
Ratio
ROA1 13.06% 13.93% 13.62% 13.07% 12.31%
Benchmarks
ROA, Industry
Technology 12.47% 11.62% 13.60% 13.29% 10.64%

Source: Based on data from International Business Machines Corp. Annual Reports

2013 Calculations

1 ROA = 100 × Net income attributable to IBM ÷ Total assets
= 100 × 16,483 ÷ 126,223 = 13.06%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. International Business Machines Corp.'s ROA improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.

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