International Business Machines Corp., FCFF calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to IBM	7,502)	1,639)	5,743)	5,590)	9,431)
Net income attributable to noncontrolling interest	16)	20)	19)	22)	25)
Net noncash charges	4,229)	8,815)	5,072)	4,336)	4,089)
Changes in operating assets and liabilities, net of acquisitions/divestitures	2,184)	(39)	1,962)	8,249)	1,225)
Net cash provided by operating activities	13,931)	10,435)	12,796)	18,197)	14,770)
Interest paid on debt, net of tax¹	1,434)	1,107)	1,467)	1,446)	1,584)
Interest capitalized, net of tax²	8)	4)	3)	5)	5)
Payments for property, plant and equipment	(1,245)	(1,346)	(2,062)	(2,618)	(2,286)
Proceeds from disposition of property, plant and equipment	321)	111)	387)	188)	537)
Investment in software	(565)	(626)	(706)	(612)	(621)
Free cash flow to the firm (FCFF)	13,884)	9,685)	11,885)	16,605)	13,989)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the International Business Machines Corp. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	International Business Machines Corp. FCFF decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

International Business Machines Corp., interest paid, net of tax calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Effective Income Tax Rate (EITR)
EITR¹	14.00%	21.00%	3.00%	21.00%	6.00%
Interest Paid, Net of Tax
Interest paid on debt, before tax	1,668)	1,401)	1,512)	1,830)	1,685)
Less: Interest paid on debt, tax²	234)	294)	45)	384)	101)
Interest paid on debt, net of tax	1,434)	1,107)	1,467)	1,446)	1,584)
Interest Costs Capitalized, Net of Tax
Interest capitalized, before tax	9)	5)	3)	6)	5)
Less: Interest capitalized, tax³	1)	1)	—)	1)	—)
Interest capitalized, net of tax	8)	4)	3)	5)	5)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ See details »

² 2023 Calculation
Interest paid on debt, tax = Interest paid on debt × EITR
= 1,668 × 14.00% = 234

³ 2023 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 9 × 14.00% = 1

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International Business Machines Corp., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	209,628)
Free cash flow to the firm (FCFF)	13,884)
Valuation Ratio
EV/FCFF	15.10
Benchmarks
EV/FCFF, Competitors¹
Accenture PLC	21.17
Adobe Inc.	29.05
Intuit Inc.	34.36
Microsoft Corp.	50.56
Oracle Corp.	34.48
Palo Alto Networks Inc.	33.75
Salesforce Inc.	26.62
ServiceNow Inc.	52.52
Synopsys Inc.	50.40
EV/FCFF, Sector
Software & Services	39.77
EV/FCFF, Industry
Information Technology	40.55

Based on: 10-K (reporting date: 2023-12-31).

¹ Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

International Business Machines Corp., historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	211,965)	159,474)	155,684)	155,259)	179,930)
Free cash flow to the firm (FCFF)²	13,884)	9,685)	11,885)	16,605)	13,989)
Valuation Ratio
EV/FCFF³	15.27	16.47	13.10	9.35	12.86
Benchmarks
EV/FCFF, Competitors⁴
Accenture PLC	20.26	16.99	24.76	17.90	18.49
Adobe Inc.	37.75	20.82	33.61	40.43	40.48
Intuit Inc.	31.28	32.85	48.64	37.90	33.30
Microsoft Corp.	41.75	32.31	38.37	33.99	26.37
Oracle Corp.	35.83	31.60	16.36	14.99	14.03
Palo Alto Networks Inc.	28.15	29.29	32.74	26.50	20.44
Salesforce Inc.	28.41	35.97	44.91	39.63	41.21
ServiceNow Inc.	56.49	40.86	60.13	83.74	67.96
Synopsys Inc.	55.87	30.82	38.59	42.88	33.32
EV/FCFF, Sector
Software & Services	35.26	29.16	31.90	27.10	23.26
EV/FCFF, Industry
Information Technology	34.25	27.01	27.93	24.12	19.69

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ See details »

² See details »

³ 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 211,965 ÷ 13,884 = 15.27

⁴ Click competitor name to see calculations.

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Valuation ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	International Business Machines Corp. EV/FCFF ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

International Business Machines Corp. (NYSE:IBM)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical