Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

International Business Machines Corp., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Capitalized software	1,636)	1,650)	1,696)	1,777)	1,749)
Client relationships	9,053)	8,559)	9,021)	8,838)	8,921)
Completed technology	5,713)	5,220)	6,074)	5,957)	6,261)
Patents/trademarks	1,821)	2,140)	2,196)	2,246)	2,301)
Other	42)	19)	44)	56)	55)
Intangible assets, gross carrying amount	18,265)	17,588)	19,031)	18,874)	19,287)
Accumulated amortization	(7,229)	(6,404)	(6,520)	(5,078)	(4,052)
Intangible assets, net carrying amount	11,036)	11,184)	12,511)	13,796)	15,235)
Goodwill	60,178)	55,949)	55,643)	59,617)	58,222)
Intangible assets including goodwill	71,214)	67,133)	68,154)	73,413)	73,457)

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
Intangible assets, net carrying amount	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	International Business Machines Corp. intangible assets, net carrying amount decreased from 2021 to 2022 and from 2022 to 2023.
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	International Business Machines Corp. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Intangible assets including goodwill	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	International Business Machines Corp. intangible assets including goodwill decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

International Business Machines Corp., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	135,241)	127,243)	132,001)	155,971)	152,186)
Less: Goodwill	60,178)	55,949)	55,643)	59,617)	58,222)
Total assets (adjusted)	75,063)	71,294)	76,358)	96,354)	93,964)
Adjustment to Total IBM Stockholders’ Equity
Total IBM stockholders’ equity (as reported)	22,533)	21,944)	18,901)	20,597)	20,841)
Less: Goodwill	60,178)	55,949)	55,643)	59,617)	58,222)
Total IBM stockholders’ equity (adjusted)	(37,645)	(34,005)	(36,742)	(39,020)	(37,381)

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).

International Business Machines Corp., Financial Data: Reported vs. Adjusted

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International Business Machines Corp., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total Asset Turnover
Reported total asset turnover	0.46	0.48	0.43	0.47	0.51
Adjusted total asset turnover	0.82	0.85	0.75	0.76	0.82
Financial Leverage
Reported financial leverage	6.00	5.80	6.98	7.57	7.30
Adjusted financial leverage	—	—	—	—	—
Return on Equity (ROE)
Reported ROE	33.29%	7.47%	30.38%	27.14%	45.25%
Adjusted ROE	—	—	—	—	—
Return on Assets (ROA)
Reported ROA	5.55%	1.29%	4.35%	3.58%	6.20%
Adjusted ROA	9.99%	2.30%	7.52%	5.80%	10.04%

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).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	International Business Machines Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	International Business Machines Corp. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

International Business Machines Corp., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Revenue	61,860)	60,530)	57,350)	73,620)	77,147)
Total assets	135,241)	127,243)	132,001)	155,971)	152,186)
Activity Ratio
Total asset turnover¹	0.46	0.48	0.43	0.47	0.51
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenue	61,860)	60,530)	57,350)	73,620)	77,147)
Adjusted total assets	75,063)	71,294)	76,358)	96,354)	93,964)
Activity Ratio
Adjusted total asset turnover²	0.82	0.85	0.75	0.76	0.82

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).

2023 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 61,860 ÷ 135,241 = 0.46

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 61,860 ÷ 75,063 = 0.82

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	International Business Machines Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	135,241)	127,243)	132,001)	155,971)	152,186)
Total IBM stockholders’ equity	22,533)	21,944)	18,901)	20,597)	20,841)
Solvency Ratio
Financial leverage¹	6.00	5.80	6.98	7.57	7.30
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	75,063)	71,294)	76,358)	96,354)	93,964)
Adjusted total IBM stockholders’ equity	(37,645)	(34,005)	(36,742)	(39,020)	(37,381)
Solvency Ratio
Adjusted financial leverage²	—	—	—	—	—

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).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total IBM stockholders’ equity
= 135,241 ÷ 22,533 = 6.00

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total IBM stockholders’ equity
= 75,063 ÷ -37,645 = —

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to IBM	7,502)	1,639)	5,743)	5,590)	9,431)
Total IBM stockholders’ equity	22,533)	21,944)	18,901)	20,597)	20,841)
Profitability Ratio
ROE¹	33.29%	7.47%	30.38%	27.14%	45.25%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to IBM	7,502)	1,639)	5,743)	5,590)	9,431)
Adjusted total IBM stockholders’ equity	(37,645)	(34,005)	(36,742)	(39,020)	(37,381)
Profitability Ratio
Adjusted ROE²	—	—	—	—	—

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).

2023 Calculations

¹ ROE = 100 × Net income attributable to IBM ÷ Total IBM stockholders’ equity
= 100 × 7,502 ÷ 22,533 = 33.29%

² Adjusted ROE = 100 × Net income attributable to IBM ÷ Adjusted total IBM stockholders’ equity
= 100 × 7,502 ÷ -37,645 = —

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to IBM	7,502)	1,639)	5,743)	5,590)	9,431)
Total assets	135,241)	127,243)	132,001)	155,971)	152,186)
Profitability Ratio
ROA¹	5.55%	1.29%	4.35%	3.58%	6.20%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to IBM	7,502)	1,639)	5,743)	5,590)	9,431)
Adjusted total assets	75,063)	71,294)	76,358)	96,354)	93,964)
Profitability Ratio
Adjusted ROA²	9.99%	2.30%	7.52%	5.80%	10.04%

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).

2023 Calculations

¹ ROA = 100 × Net income attributable to IBM ÷ Total assets
= 100 × 7,502 ÷ 135,241 = 5.55%

² Adjusted ROA = 100 × Net income attributable to IBM ÷ Adjusted total assets
= 100 × 7,502 ÷ 75,063 = 9.99%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	International Business Machines Corp. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

International Business Machines Corp. (NYSE:IBM)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

International Business Machines Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

International Business Machines Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)