International Business Machines Corp. (NYSE:IBM)

Asset Turnover

The reported total asset turnover exhibited moderate fluctuation over the five-year period, beginning at 0.47 in 2020, dipping to 0.43 in 2021, then recovering to around 0.46-0.48 in subsequent years. The adjusted total asset turnover followed a similar pattern but maintained consistently higher values, increasing slightly from 0.51 in 2020 to 0.49 by 2024, indicating a relatively stable asset utilization when adjustments are considered.

Current Ratio

Both the reported and adjusted current ratios demonstrated upward trends. The reported current ratio showed a steady improvement from 0.98 in 2020 to 1.04 in 2024, signaling enhanced short-term liquidity. The adjusted current ratio was significantly higher throughout the period, rising from 1.48 to 1.81, suggesting that adjusted metrics reflect an even stronger liquidity position relative to the reported figures.

Debt to Equity and Debt to Capital

Reported debt to equity decreased consistently from 2.99 in 2020 to 2.01 in 2024, indicating a gradual reduction in leverage. This trend is mirrored in the adjusted debt to equity, which declined from 1.9 to 1.49, further supporting the observation of deleveraging. Correspondingly, reported debt to capital ratios declined from 0.75 to 0.67, and adjusted figures decreased from 0.66 to 0.6, reinforcing a trend toward a more conservative capital structure with less reliance on debt.

Financial Leverage

There was a notable decline in financial leverage ratios, both reported and adjusted, over the period. The reported financial leverage dropped from 7.57 in 2020 to 5.02 in 2024, while the adjusted measure decreased from 4.21 to 3.34. This reduction suggests a move towards lower overall leverage, which may indicate improved financial stability and risk management.

Profit Margins

The reported net profit margin experienced considerable volatility, with a high of 12.13% in 2023 and a low of 2.71% in 2022, reflecting fluctuations in profitability. The 2024 value of 9.6% indicates a strong recovery following the dip. Adjusted net profit margins were generally higher, peaking at 13.95% in 2021 and maintaining a solid 11.83% in 2024, demonstrating relatively robust profitability when adjustments are incorporated.

Return on Equity (ROE)

ROE figures exhibited marked variability. The reported ROE peaked at 33.29% in 2023, following a significant dip to 7.47% in 2022, before settling at 22.06% in 2024. Adjusted ROE values showed a steadier upward trajectory from 7.67% in 2020 to 19.17% in 2024, suggesting improved shareholder returns on an adjusted basis over time despite fluctuations in reported figures.

Return on Assets (ROA)

Reported ROA values echoed the general trend of profitability, with a low of 1.29% in 2022 and a peak of 5.55% in 2023, before slightly dropping to 4.39% in 2024. Adjusted ROA steadily increased from 1.82% in 2020 to 5.75% in 2024, highlighting an overall improvement in asset efficiency and income generation from assets when adjustments are made.

Revenue Trends

Revenue experienced a significant decline from 73,620 million USD in 2020 to 57,350 million USD in 2021, representing a notable contraction. Subsequently, revenue showed a recovery trend, increasing gradually over the following years to reach 62,753 million USD in 2024. The decline in 2021 was followed by moderate growth, suggesting a stabilization and mild expansion phase after an initial drop.

Total Assets and Adjusted Total Assets

Total assets decreased from 155,971 million USD in 2020 to 127,243 million USD in 2022, indicating a reduction in asset base over these years. From 2022 onward, total assets increased slightly, reaching 137,175 million USD in 2024 but did not recover to the 2020 levels. Similarly, adjusted total assets followed a comparable trend, decreasing from 147,109 million USD in 2020 to 121,309 million USD in 2022, with a mild recovery to 130,342 million USD by 2024. This pattern points to a contraction in asset holdings in the mid-period, followed by cautious reinvestment or asset growth in the later years.

Asset Turnover Ratios

The reported total asset turnover ratio declined from 0.47 in 2020 to 0.43 in 2021, reflecting a decrease in efficiency in utilizing assets to generate revenue. This ratio improved again in 2022 to 0.48 but then slightly declined or stabilized around 0.46 through to 2024. The adjusted total asset turnover ratio mirrored this behavior, falling from 0.51 in 2020 to 0.46 in 2021, then increasing and stabilizing around 0.49 from 2022 through 2024. Overall, efficiency levels were lower in 2021 but showed partial recovery and consolidation thereafter.

Overall Analysis

The observed data depict an initial period of contraction in both revenue and asset base during 2021, accompanied by decreased asset efficiency. This was followed by recovery phases in both revenue and assets, with asset turnover ratios indicating a rebound in operational efficiency but not necessarily a full return to pre-2021 performance. The adjustments to revenue and total assets provided parallel insights, confirming the trend of a mid-period dip and subsequent stabilization. The company's financial profile suggests a response to challenging conditions in 2021, followed by cautious growth and optimization of asset utilization in subsequent years.

The analysis of the annual financial data over the five-year period reveals several notable trends in liquidity and asset management.

Current Assets

There is an overall decline followed by a recovery. The value decreased from 39,165 million USD in 2020 to 29,118 million USD in 2022, then increased to 34,482 million USD by 2024. This indicates an initial contraction in liquid resources, followed by gradual replenishment.

Current Liabilities

Current liabilities declined steadily from 39,869 million USD in 2020 to 31,505 million USD in 2022, then rose somewhat to 33,142 million USD in 2024. This pattern suggests a reduction in short-term obligations early on, with a modest increase in more recent years.

Reported Current Ratio

The reported current ratio decreased from 0.98 in 2020 to a low of 0.88 in 2021, then improved gradually to 1.04 by 2024. This ratio suggests that initially, the company had less than adequate current assets to cover current liabilities, but liquidity improved over time, surpassing the benchmark of 1.0 towards the end.

Adjusted Current Assets

Adjusted current assets closely mirror the trend in reported current assets but consistently show slightly higher values. From 39,544 million USD in 2020, they decreased to 29,440 million USD in 2022 and then increased to 34,627 million USD in 2024. This adjustment presumably factors in more accurate or relevant current asset figures that affect liquidity assessment.

Adjusted Current Liabilities

Adjusted current liabilities show a more pronounced downward trend compared to reported current liabilities. They decreased from 26,749 million USD in 2020 to 19,257 million USD in 2022, then further dropped to 19,098 million USD in 2024. This suggests that after adjustments, the company’s short-term financial obligations are lower than initially reported, indicating stronger liquidity.

Adjusted Current Ratio

The adjusted current ratio remains significantly higher than the reported current ratio throughout the period, improving from 1.48 in 2020 to 1.81 in 2024. This upward trend denotes an increasing cushion of adjusted current assets relative to adjusted current liabilities, reflecting better short-term financial health and an enhanced ability to cover liabilities with liquid assets.

In summary, the company's liquidity position experienced some strain between 2020 and 2022 but has demonstrated consistent improvement thereafter. Adjusted figures suggest stronger liquidity than reported values indicate, highlighting the importance of considering adjustments for a more accurate financial assessment. Overall, the upward trajectory of the current ratios implies enhanced short-term financial stability by the end of the period examined.

Total debt

The total debt exhibited a declining trend from 61,538 million USD at the end of 2020 to 50,949 million USD in 2022, indicating a reduction in liabilities during this period. However, total debt increased somewhat in 2023 to 56,547 million USD before slightly decreasing again to 54,973 million USD in 2024. Overall, there was a moderate net decrease in total debt over the five-year span.

Total IBM stockholders’ equity

Stockholders' equity initially declined from 20,597 million USD in 2020 to 18,901 million USD in 2021. From 2021 onwards, equity steadily increased each year, reaching 27,307 million USD in 2024. This trend reflects an overall strengthening of the company’s equity base despite the initial dip.

Reported debt to equity ratio

The reported debt to equity ratio steadily declined from 2.99 in 2020 to 2.32 in 2022, reflecting improvement in leverage by either reducing debt, increasing equity, or both. Despite a temporary increase in 2023 (2.51), the ratio decreased again in 2024 to 2.01, the lowest in the period analyzed, signaling a continued reduction in financial risk relative to equity.

Adjusted total debt

Adjusted total debt followed a similar pattern to total debt, decreasing from 66,469 million USD in 2020 to 54,013 million USD in 2022, then rising to 59,935 million USD in 2023, before edging down to 58,396 million USD in 2024. The adjustment suggests that the baseline debt figures were supplemented for a more comprehensive measure, but the underlying trend remained consistent.

Adjusted total equity

The adjusted equity also declined initially from 34,979 million USD in 2020 to 32,346 million USD in 2021 but then recovered and grew steadily to 39,068 million USD in 2024. The overall increase in adjusted equity suggests improving net asset positions when accounting for adjustments.

Adjusted debt to equity ratio

This ratio declined from 1.90 in 2020 to 1.58 in 2022, indicating reduced leverage. Although there was a rise to 1.73 in 2023, the ratio decreased again in 2024 to 1.49, the lowest level over the time frame. This pattern underscores a general improvement in the balance between debt and equity, suggesting a stronger financial position with less relative reliance on debt financing.

Total Debt

The total debt showed a decreasing trend from 61,538 million US dollars in 2020 to 50,949 million US dollars in 2022. Afterwards, it increased in 2023 to 56,547 million US dollars before slightly declining to 54,973 million US dollars in 2024. Overall, total debt decreased over the period, with some fluctuations.

Total Capital

Total capital initially declined from 82,135 million US dollars in 2020 to 70,605 million US dollars in 2021. It then increased steadily, reaching 82,280 million US dollars by 2024, surpassing the initial 2020 level.

Reported Debt to Capital Ratio

The reported debt to capital ratio decreased from 0.75 in 2020 to 0.70 in 2022, indicating a gradual reduction in leverage. It slightly increased to 0.72 in 2023 before declining again to 0.67 in 2024, reflecting an overall improving debt position relative to capital over the five-year period.

Adjusted Total Debt

Adjusted total debt followed a similar pattern to total debt, declining from 66,469 million US dollars in 2020 to 54,013 million US dollars in 2022. It increased in 2023 to 59,935 million US dollars and then decreased to 58,396 million US dollars in 2024. The adjusted figures are consistently higher than the reported total debt, suggesting additional debt-like liabilities considered in adjustments.

Adjusted Total Capital

Adjusted total capital decreased from 101,448 million US dollars in 2020 to 87,486 million US dollars in 2021 and remained relatively stable through 2022. From 2023 onward, it increased steadily to 97,464 million US dollars in 2024. The adjusted capital consistently exceeds the reported total capital, reflecting additional assets or equity considered in adjustments.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio declined from 0.66 in 2020 to 0.61 in 2022, suggesting reduction in leverage when considering adjusted figures. It rose moderately to 0.63 in 2023 before decreasing again to 0.60 in 2024, confirming a general trend of improved solvency over the period.

Total Assets

The total assets exhibited a decline from 155,971 million US dollars at the end of 2020 to 127,243 million US dollars by the end of 2022. Following this decrease, a recovery trend is observed with total assets increasing to 137,175 million US dollars by the end of 2024. Overall, the asset base shows a contraction followed by moderate growth.

Total IBM Stockholders’ Equity

Stockholders’ equity decreased from 20,597 million US dollars in 2020 to 18,901 million US dollars in 2021. It then increased continuously, reaching 27,307 million US dollars by the end of 2024. The equity showed a rebound and a strong upward trend after the initial decline.

Reported Financial Leverage

The reported financial leverage ratio declined steadily from 7.57 in 2020 to 5.02 in 2024. This indicates a reduction in the company’s use of debt relative to equity over the period, reflecting a generally more conservative capital structure.

Adjusted Total Assets

Adjusted total assets followed a pattern similar to that of total assets, decreasing from 147,109 million US dollars in 2020 to 121,309 million US dollars in 2022, before rising to 130,342 million US dollars in 2024. The adjusted figures show a consistent contraction and partial recovery throughout the period.

Adjusted Total Equity

Adjusted total equity decreased from 34,979 million US dollars in 2020 to 32,346 million US dollars in 2021, then increased consistently in subsequent years to 39,068 million US dollars by the end of 2024. This shows a recovery and strengthening of equity on an adjusted basis.

Adjusted Financial Leverage

The adjusted financial leverage ratio decreased steadily from 4.21 in 2020 to 3.34 in 2024. The reduction in leverage is consistent with the trend observed in the reported financial leverage, indicating a deliberate effort to reduce financial risk.

The financial data reflects variability in both income and revenue figures over the analyzed periods, with notable fluctuations in profitability metrics.

Net Income attributable to the company

The net income experienced significant changes, starting at 5,590 million US dollars at the end of 2020, slightly increasing to 5,743 million in 2021, followed by a considerable decline to 1,639 million in 2022. Subsequently, net income rebounded sharply to 7,502 million in 2023 and then decreased to 6,023 million in 2024. This pattern indicates high volatility in net earnings over the five-year span.

Revenue

Revenue shows a downward trend from 73,620 million US dollars in 2020 to 57,350 million in 2021. This was followed by a gradual recovery, with revenues increasing to 60,530 million in 2022, then to 61,860 million in 2023, and reaching 62,753 million in 2024. Despite the initial drop, revenue stabilized and demonstrated modest growth in the later years.

Reported Net Profit Margin

The reported net profit margin corresponds to the volatility seen in net income. It rose from 7.59% in 2020 to 10.01% in 2021, plummeted to 2.71% in 2022, then surged to 12.13% in 2023, before slightly decreasing to 9.6% in 2024. These fluctuations suggest variability in cost control or other income statement factors during this period.

Adjusted Net Income

Adjusted net income exhibits a less volatile but still irregular trend. Starting at 2,683 million US dollars in 2020, it sharply increased to 8,049 million in 2021, decreased to 4,861 million in 2022, followed by incremental increases to 5,734 million in 2023 and 7,491 million in 2024. This indicates that adjusted results smooth out some fluctuations observed in reported net income, though there is still evident income instability.

Adjusted Revenue

Adjusted revenue closely follows the trend of reported revenue, beginning at 74,877 million US dollars in 2020, sharply declining to 57,707 million in 2021, then showing gradual recovery to 59,966 million in 2022, 63,313 million in 2023, and slightly decreasing to 63,298 million in 2024. The adjustment seems to have a modest effect on the reported amounts but retains the general pattern of decline followed by recovery.

Adjusted Net Profit Margin

The adjusted net profit margin reveals less extreme fluctuations compared to the reported margin. It was at 3.58% in 2020, increased significantly to 13.95% in 2021, dropped to 8.11% in 2022, slightly improved to 9.06% in 2023, and increased further to 11.83% in 2024. This suggests that the adjusted profitability might better reflect the underlying operational performance, showing an overall improving trend after the 2021 peak adjustment.

Overall, the data indicates a period of financial instability marked by a significant drop in net income and revenue around 2021, followed by a moderate recovery in subsequent years. The adjusted figures provide a clearer picture of operational performance, smoothing away some volatility but still reflecting underlying challenges and gradual improvement in profitability metrics.

Net Income Attributable to IBM

The net income shows significant volatility over the five-year period. It increased modestly from 5590 million USD in 2020 to 5743 million USD in 2021, then declined sharply to 1639 million USD in 2022. However, this was followed by a strong recovery, reaching a peak of 7502 million USD in 2023 before decreasing again to 6023 million USD in 2024.

Total IBM Stockholders’ Equity

Total stockholders' equity experienced fluctuations with a general upward trend. It decreased from 20597 million USD in 2020 to 18901 million USD in 2021, then increased steadily over the next three years, reaching 27307 million USD by 2024.

Reported Return on Equity (ROE)

The reported ROE mirrored the trends in net income, showing high variability. It rose from 27.14% in 2020 to 30.38% in 2021, plummeted to 7.47% in 2022, then surged to 33.29% in 2023 before declining to 22.06% in 2024. This indicates fluctuating profitability relative to equity over the period.

Adjusted Net Income

Adjusted net income exhibited a different pattern. After an initial increase from 2683 million USD in 2020 to 8049 million USD in 2021, it fell to 4861 million USD in 2022. Subsequently, it showed a steady increase through 2023 and 2024, reaching 7491 million USD, suggesting adjustments smooth some volatility present in reported figures.

Adjusted Total Equity

Adjusted total equity experienced minor fluctuations but remained relatively stable before increasing in the final year. It decreased from 34979 million USD in 2020 to 32346 million USD in 2021, then increased modestly to 34261 million USD in 2022 and 34637 million USD in 2023, followed by a more notable rise to 39068 million USD in 2024.

Adjusted Return on Equity

Adjusted ROE showed a rising trend after an initial peak and drop. It moved from 7.67% in 2020 up sharply to 24.88% in 2021, declining to 14.19% in 2022. Thereafter, it increased consistently to 16.55% in 2023 and 19.17% in 2024, indicating improving profitability on an adjusted basis over the latter part of the time frame.

Summary

Overall, the data indicates pronounced volatility in reported net income and ROE, with 2022 marking a significant downturn followed by a recovery phase. Adjusted figures exhibit less volatility, reflecting smoother trends in profitability and equity. The increase in adjusted ROE towards 2024 suggests strengthening operational performance and improved returns relative to equity on an adjusted basis. The growth in both reported and adjusted equity in 2023 and 2024 supports the trend of increasing financial stability and capacity.

Net income attributable to IBM

The net income demonstrates variability over the analyzed years, starting at $5,590 million in 2020, increasing slightly to $5,743 million in 2021, then dropping significantly to $1,639 million in 2022. Subsequently, there is a strong rebound in 2023 to $7,502 million, followed by a moderate decline to $6,023 million in 2024. This pattern indicates volatility in profitability with a notable recovery after 2022.

Total assets

Total assets decreased from $155,971 million in 2020 to a low of $127,243 million in 2022. From 2022 onwards, there is a gradual increase, reaching $137,175 million in 2024, but the asset base in 2024 remains below the 2020 levels. The trend suggests a contraction in assets through 2022, followed by cautious growth.

Reported Return on Assets (ROA)

Reported ROA aligns with the fluctuations in net income and total assets. It rose from 3.58% in 2020 to 4.35% in 2021, dropped to a low of 1.29% in 2022, then peaked at 5.55% in 2023, and decreased to 4.39% in 2024. The ROA trend reflects the company's fluctuating efficiency in generating profit from its assets, with a significant dip in 2022 and highest effectiveness in 2023.

Adjusted net income

The adjusted net income shows a divergent pattern compared to reported net income, indicating differing adjustments or exclusions in the calculation. Starting at $2,683 million in 2020, it sharply increases to $8,049 million in 2021, declines to $4,861 million in 2022, then recovers slightly to $5,734 million in 2023, and further rises to $7,491 million in 2024. This trend suggests that adjustments significantly impact income reporting and that the company’s core profitability (after adjustments) exhibits a less volatile but still fluctuating progression.

Adjusted total assets

Adjusted total assets mimic the pattern of reported total assets but at a slightly lower scale. From $147,109 million in 2020, there is a consistent decline to $121,309 million in 2022, followed by a recovery phase with $130,342 million in 2024. This indicates asset adjustments affect the evaluation of asset base but confirm the same broad trend of contraction and recovery.

Adjusted Return on Assets (ROA)

The adjusted ROA exhibits a more pronounced growth trend compared to reported ROA. It starts at a low 1.82% in 2020, jumps to 6.45% in 2021, then decreases to 4.01% in 2022, followed by gradual improvement to 4.45% in 2023 and further growth to 5.75% in 2024. This suggests that when considering adjusted figures, the company demonstrates increasing efficiency in asset utilization after 2022, with overall better profitability metrics than on a reported basis.

Overall insights

The financial data indicates that the company experienced significant disruptions in 2022, reflected by sharp declines in net income, total assets, and ROA measures. However, the company showed a strong recovery trajectory beginning in 2023, with improving profitability and asset utilization efficiency through 2024. Adjusted figures reveal higher profitability and ROA levels than reported figures, implying the presence of nonrecurring items or accounting adjustments affecting the reported earnings. Asset levels declined initially but started to increase moderately after 2022, reflecting a stabilization or cautious expansion in asset holdings. The overall trend suggests resilience with a temporary dip, followed by solid recovery and improving operational performance in recent years.