An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

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)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	—)	—)	—)	—)	—)
Total assets (adjusted)	135,241)	127,243)	132,001)	155,971)	152,186)
Adjustment to Total Debt
Total debt (as reported)	56,547)	50,949)	51,704)	61,538)	62,899)
Add: Operating lease liability (before adoption of FASB Topic 842)²	—)	—)	—)	—)	—)
Add: Current operating lease liabilities	820)	874)	974)	1,357)	1,380)
Add: Noncurrent operating lease liabilities	2,568)	2,190)	2,462)	3,574)	3,879)
Total debt (adjusted)	59,935)	54,013)	55,140)	66,469)	68,158)

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, 2} Equal to total present value of future operating lease payments.

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 Turnover¹
Reported total asset turnover	0.46	0.48	0.43	0.47	0.51
Adjusted total asset turnover	0.46	0.48	0.43	0.47	0.51
Debt to Equity²
Reported debt to equity	2.51	2.32	2.74	2.99	3.02
Adjusted debt to equity	2.66	2.46	2.92	3.23	3.27
Return on Assets³ (ROA)
Reported ROA	5.55%	1.29%	4.35%	3.58%	6.20%
Adjusted ROA	5.55%	1.29%	4.35%	3.58%	6.20%

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 See details »

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 debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	International Business Machines Corp. adjusted debt to equity 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 Operating Leases
Selected Financial Data (US$ in millions)
Revenue	61,860)	60,530)	57,350)	73,620)	77,147)
Adjusted total assets	135,241)	127,243)	132,001)	155,971)	152,186)
Activity Ratio
Adjusted total asset turnover²	0.46	0.48	0.43	0.47	0.51

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 ÷ 135,241 = 0.46

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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 debt	56,547)	50,949)	51,704)	61,538)	62,899)
Total IBM stockholders’ equity	22,533)	21,944)	18,901)	20,597)	20,841)
Solvency Ratio
Debt to equity¹	2.51	2.32	2.74	2.99	3.02
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	59,935)	54,013)	55,140)	66,469)	68,158)
Total IBM stockholders’ equity	22,533)	21,944)	18,901)	20,597)	20,841)
Solvency Ratio
Adjusted debt to equity²	2.66	2.46	2.92	3.23	3.27

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 Debt to equity = Total debt ÷ Total IBM stockholders’ equity
= 56,547 ÷ 22,533 = 2.51

² Adjusted debt to equity = Adjusted total debt ÷ Total IBM stockholders’ equity
= 59,935 ÷ 22,533 = 2.66

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	International Business Machines Corp. adjusted debt-to-equity 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)
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 Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to IBM	7,502)	1,639)	5,743)	5,590)	9,431)
Adjusted total assets	135,241)	127,243)	132,001)	155,971)	152,186)
Profitability Ratio
Adjusted ROA²	5.55%	1.29%	4.35%	3.58%	6.20%

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 ÷ 135,241 = 5.55%

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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 Operating Leases

Adjustments to Financial Statements for Operating Leases

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

Adjusted Financial Ratios for Operating Leases (Summary)

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

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)