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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
International Business Machines Corp., adjustment to net income attributable to IBM
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
The financial data over the five-year period reveals significant fluctuations in both reported and adjusted net income attributable to the company. Both metrics closely align in value, indicating minimal differences between reported and investment-adjusted figures.
- 2020 to 2021
- There was a modest increase in net income, with reported and adjusted figures rising from approximately 5.59 billion to 5.74 billion US dollars. This represents a stable financial performance between these two years.
- 2021 to 2022
- A pronounced decline occurred, with net income sharply dropping from about 5.74 billion to roughly 1.64 billion US dollars. This significant reduction suggests either a major operational challenge or extraordinary items impacting earnings during this period.
- 2022 to 2023
- The financial position improved dramatically, as net income surged to approximately 7.5 billion US dollars. This rebound not only compensated for the prior year's decline but resulted in the highest recorded net income within the observed timeframe.
- 2023 to 2024
- A decrease in net income is observed, with figures lowering to around 6.02 billion US dollars. While this marks a reduction from the peak in 2023, the value remains notably higher than most earlier years, indicating sustained profitability.
Overall, the data indicates volatility in net income with a steep dip in 2022 followed by a robust recovery in 2023. The close correspondence between reported and adjusted net income suggests limited impact from investment-related adjustments over these years. The company's profitability in 2024 remains strong despite the recent decrease from the previous year's peak.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
International Business Machines Corp., adjusted profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 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).
The analysis of the financial performance indicators over the five-year period reveals several key trends in profitability and returns. Both the reported and adjusted figures for net profit margin, return on equity (ROE), and return on assets (ROA) show consistent alignment, indicating stability in the adjustments made to the financial data.
- Net Profit Margin
- The net profit margin experienced fluctuations throughout the period. Starting at 7.59% in 2020, it increased notably to 10.01% in 2021, indicating improved profitability. However, there was a significant decline in 2022 to 2.71%, reflecting a challenging year. The margin rebounded sharply in 2023 to 12.13%, the highest level in the given timeline, before declining again to 9.6% in 2024. This pattern suggests volatility in profit generation, with recovery after a dip but not maintaining peak profitability.
- Return on Equity (ROE)
- ROE trends mirror those of the net profit margin, beginning at a strong 27.14% in 2020 and rising to 30.38% in 2021. There was a pronounced drop to 7.47% in 2022, indicating diminished effectiveness in generating profits from shareholder equity. The ROE then recovered significantly to 33.29% in 2023, the peak in the dataset, before falling to 22.06% in 2024. These fluctuations suggest that the company faced substantial challenges in 2022 but regained efficiency the following year, although with somewhat reduced performance in 2024.
- Return on Assets (ROA)
- ROA followed a similar trajectory as ROE and net profit margin. It increased moderately from 3.58% in 2020 to 4.35% in 2021, then dropped sharply to 1.29% in 2022, reflecting reduced profitability relative to asset base. A vigorous recovery to 5.55% occurred in 2023, the highest point recorded, before decreasing to 4.39% in 2024. This pattern confirms the temporary setback in 2022 and subsequent operational improvements, although with some decline in the final year observed.
Overall, the data indicates a year of considerable adversity in 2022 across all key profitability metrics, followed by a strong recovery in 2023. The decrease in 2024 suggests that while the company improved post-2022, it faced renewed pressures or normalization of returns. The consistent parity between reported and adjusted figures suggests that external adjustments had limited impact on the underlying performance trends during the period under review.
International Business Machines Corp., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2024-12-31), 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).
2024 Calculations
1 Net profit margin = 100 × Net income attributable to IBM ÷ Revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributable to IBM ÷ Revenue
= 100 × ÷ =
- Net Income Trends
- The reported net income attributable to the company exhibited a notable fluctuation over the five-year period. Beginning at $5,590 million in 2020, there was a slight increase to $5,743 million in 2021, followed by a significant decline to $1,639 million in 2022. Subsequently, net income surged sharply to $7,502 million in 2023 before declining again to $6,023 million in 2024. The adjusted net income figures followed a parallel pattern, indicating consistency between reported and adjusted results.
- Profit Margin Dynamics
- The reported net profit margin mirrored trends observed in net income. Starting at 7.59% in 2020, it rose to 10.01% in 2021, reflecting improved profitability. However, in 2022, it fell drastically to 2.71%, indicating a substantial reduction in profitability during that year. There was a notable recovery in 2023, with the margin reaching 12.13%, the highest in the examined period, followed by a decrease to 9.6% in 2024. Adjusted net profit margins tracked these changes identically.
- Overall Observations
- The data reveal considerable volatility in the company's profitability across the five years. After moderate growth in 2021, both net income and profit margins declined sharply in 2022, which may suggest the impact of one-off events or market conditions during that year. The strong rebound in 2023 indicates a recovery phase, although profitability decreased slightly in 2024 while remaining above initial levels. The close alignment between reported and adjusted figures suggests minimal impact from non-recurring or extraordinary items on reported results.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2024-12-31), 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).
2024 Calculations
1 ROE = 100 × Net income attributable to IBM ÷ Total IBM stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to IBM ÷ Total IBM stockholders’ equity
= 100 × ÷ =
- Net Income Trends
- The reported net income attributable to the company showed variation over the analyzed periods. There was an increase from 5,590 million US dollars in 2020 to 5,743 million US dollars in 2021. In 2022, net income sharply decreased to 1,639 million US dollars, representing a significant decline. This was followed by a marked recovery in 2023, reaching 7,502 million US dollars. In 2024, net income declined again but remained elevated at 6,023 million US dollars. Adjusted net income followed an almost identical pattern, indicating that adjustments had minimal impact on reported profitability figures.
- Return on Equity (ROE) Trends
- Reported ROE exhibited fluctuation consistent with net income trends. It rose from 27.14% in 2020 to 30.38% in 2021, indicating improved profitability relative to equity. However, in 2022, ROE dropped substantially to 7.47%, mirroring the decline in net income. The metric rebounded strongly in 2023 to 33.29%, surpassing prior years, before declining to 22.06% in 2024. Adjusted ROE closely tracked reported ROE throughout the periods, suggesting adjusted figures did not significantly alter return measures.
- Overall Patterns and Insights
- The data reveals an overall volatility in profitability and return measures with a notable dip in 2022, followed by strong recovery in 2023. While 2024 showed declines from the peak in 2023, profit and ROE levels remained relatively robust compared to early years. The near-identical values between reported and adjusted figures suggest limited impact from adjustments on the key profitability metrics in the reviewed years.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2024-12-31), 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).
2024 Calculations
1 ROA = 100 × Net income attributable to IBM ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributable to IBM ÷ Total assets
= 100 × ÷ =
- Net Income Analysis
- The reported net income attributable to the company exhibited moderate stability between 2020 and 2021, increasing slightly from 5590 million to 5743 million US dollars. However, a significant decline occurred in 2022, with net income dropping sharply to 1639 million US dollars. This was followed by a pronounced recovery and growth in 2023, reaching the highest level in the observed period at 7502 million US dollars. In 2024, the reported net income decreased again to 6023 million US dollars, although it remained well above the 2022 low.
- The adjusted net income attributable to the company followed a virtually identical pattern, indicating that adjustments made had minimal impact on the net income figures and trends.
- Return on Assets (ROA) Analysis
- The reported ROA demonstrated a similar trend to net income, reflecting underlying profitability relative to assets. It increased from 3.58% in 2020 to 4.35% in 2021, then dropped substantially to 1.29% in 2022. This decline corresponds with the sharp fall in net income, suggesting a deterioration in asset utilization or profitability during that year. ROA then rose significantly in 2023 to 5.55%, the highest in the period, indicating a strong recovery in asset efficiency and profitability. In 2024, ROA decreased to 4.39%, still maintaining healthy returns compared to earlier years.
- Adjusted ROA values matched the reported ROA exactly, implying that no adjustments materially affected the returns measured on assets.
- Overall Trends and Insights
- The observed financial patterns suggest volatility in profitability over the five-year period. The sharp decline in 2022 followed by a robust recovery in 2023 suggests that 2022 was an anomalous year marked by significant challenges or one-time events impacting net income and asset profitability. Despite the rebound, the reduction in 2024 indicates some moderation in earnings performance.
- The closeness of reported and adjusted figures throughout the period indicates that the adjustments do not significantly alter the reported financial outcomes, reinforcing the reliability of the reported results for analysis.