Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

International Business Machines Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Net income	10,593)	6,023)	7,502)	1,639)	5,743)
Pension settlement charge	—)	3,113)	—)	5,894)	—)
Depreciation, includes operating lease right-of-use assets amortization expense	2,284)	2,168)	2,109)	2,407)	3,888)
Amortization of capitalized software and acquired intangible assets	2,737)	2,499)	2,287)	2,395)	2,529)
Stock-based compensation	1,715)	1,311)	1,133)	987)	982)
Deferred taxes	(957)	(2,330)	(1,114)	(2,726)	(2,001)
Net gain on divestitures, asset sales and other	(40)	(652)	(170)	(122)	(307)
Receivables, including financing receivables	(4,278)	(374)	725)	(539)	1,372)
Retirement related	(50)	265)	(462)	331)	1,038)
Inventory	70)	(166)	390)	71)	138)
Other assets/other liabilities	495)	1,601)	1,466)	(115)	(671)
Accounts payable	624)	(13)	65)	213)	85)
Change in operating assets and liabilities, net of acquisitions/divestitures	(3,139)	1,313)	2,184)	(39)	1,962)
Adjustments to reconcile net income to cash provided by operating activities	2,600)	7,422)	6,429)	8,796)	7,053)
Net cash provided by operating activities	13,193)	13,445)	13,931)	10,435)	12,796)
Payments for property, plant and equipment	(1,091)	(1,048)	(1,245)	(1,346)	(2,062)
Proceeds from disposition of property, plant and equipment/other	121)	557)	321)	111)	387)
Investment in software	(647)	(637)	(565)	(626)	(706)
Purchases of marketable securities and other investments	(10,094)	(7,762)	(11,142)	(5,930)	(3,562)
Proceeds from disposition of marketable securities and other investments	9,704)	6,544)	10,647)	4,665)	3,147)
Acquisition of businesses, net of cash acquired	(8,294)	(3,289)	(5,082)	(2,348)	(3,293)
Divestiture of businesses, net of cash transferred	(1)	698)	(4)	1,272)	114)
Net cash used in investing activities	(10,302)	(4,937)	(7,070)	(4,202)	(5,975)
Proceeds from new debt	8,391)	5,705)	9,586)	7,804)	522)
Payments to settle debt	(5,489)	(6,615)	(5,082)	(6,800)	(8,597)
Short-term borrowings (repayments) less than 90 days, net	(29)	30)	(7)	217)	(40)
Common stock repurchases for tax withholdings	(1,018)	(651)	(402)	(407)	(319)
Proceeds from issuance of shares	710)	745)	414)	279)	—)
Financing, other	(139)	(146)	(238)	(103)	70)
Distribution from Kyndryl	—)	—)	—)	—)	879)
Cash dividends paid	(6,255)	(6,147)	(6,040)	(5,948)	(5,869)
Net cash used in financing activities	(3,829)	(7,079)	(1,769)	(4,958)	(13,354)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	418)	(358)	9)	(244)	(185)
Net change in cash, cash equivalents and restricted cash	(520)	1,071)	5,101)	1,031)	(6,718)
Cash, cash equivalents and restricted cash at January 1	14,160)	13,089)	7,988)	6,957)	13,675)
Cash, cash equivalents and restricted cash at December 31	13,640)	14,160)	13,089)	7,988)	6,957)

Based on: 10-K (reporting date: 2025-12-31), 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).

The cash flow profile reflects a period of significant volatility in net income countered by remarkably stable operational cash generation. While net income experienced sharp fluctuations, particularly between 2022 and 2025, the net cash provided by operating activities remained resilient, consistently exceeding 10 billion USD annually. This divergence suggests that non-cash adjustments and working capital management have played a critical role in maintaining liquidity despite earnings volatility.

Operating Cash Flow Dynamics: Net cash provided by operating activities remained strong, peaking at 13.9 billion USD in 2023. The stability of these flows is attributed to consistent non-cash charges, including depreciation and amortization, which collectively contributed several billion USD annually. Notably, pension settlement charges in 2022 and 2024 created significant downward pressure on net income but were neutralized in the operating cash flow calculation, illustrating a disconnect between accounting profit and cash liquidity.
Investment Strategy and Capital Expenditure: Investing activities are characterized by a strategic shift toward business acquisitions and a reduction in traditional capital expenditures. Payments for property, plant, and equipment trended downward from 2.06 billion USD in 2021 to 1.09 billion USD in 2025. Conversely, the acquisition of businesses has accelerated, with a substantial increase to 8.29 billion USD in 2025, indicating an aggressive inorganic growth strategy. The high volume of purchases and proceeds from marketable securities suggests active liquidity management within the investment portfolio.
Financing and Shareholder Returns: A disciplined approach to shareholder returns is evident through a highly consistent dividend policy, with annual payouts steadily increasing from 5.87 billion USD in 2021 to 6.26 billion USD in 2025. Financing activities show a recurring cycle of debt issuance and repayment to manage the balance sheet. The net cash used in financing activities fluctuated significantly, peaking in 2021 at 13.35 billion USD, largely driven by debt settlement and dividend obligations.
Liquidity and Cash Position: The overall cash and restricted cash position demonstrated a general upward trend through 2024, rising from 6.96 billion USD in 2021 to a peak of 14.16 billion USD. A slight contraction occurred in 2025, ending at 13.64 billion USD, primarily due to the surge in business acquisitions. The company maintains a robust liquidity buffer that supports both its operational needs and its strategic investment initiatives.

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International Business Machines Corp. (NYSE:IBM)

Cash Flow Statement