Stock Analysis on Net

International Business Machines Corp. (NYSE:IBM)

Adjusted Financial Ratios

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Adjusted Financial Ratios (Summary)

International Business Machines Corp., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Activity Ratio
Total Asset Turnover
Reported 0.47 0.51 0.65 0.63 0.68
Adjusted 0.51 0.53 0.64 0.63 0.67
Liquidity Ratio
Current Ratio
Reported 0.98 1.02 1.29 1.33 1.21
Adjusted 1.48 1.53 1.86 1.97 1.78
Solvency Ratios
Debt to Equity
Reported 2.99 3.02 2.73 2.66 2.31
Adjusted 1.90 1.80 1.64 1.78 1.66
Debt to Capital
Reported 0.75 0.75 0.73 0.73 0.70
Adjusted 0.66 0.64 0.62 0.64 0.62
Financial Leverage
Reported 7.57 7.30 7.35 7.12 6.44
Adjusted 4.21 3.89 3.99 4.27 4.06
Profitability Ratios
Net Profit Margin
Reported 7.59% 12.22% 10.97% 7.27% 14.86%
Adjusted 3.58% 13.01% 10.42% 10.75% 13.63%
Return on Equity (ROE)
Reported 27.14% 45.25% 51.96% 32.70% 65.07%
Adjusted 7.67% 26.96% 26.51% 28.83% 37.15%
Return on Assets (ROA)
Reported 3.58% 6.20% 7.07% 4.59% 10.11%
Adjusted 1.82% 6.92% 6.65% 6.76% 9.14%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

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 deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. International Business Machines Corp. adjusted current ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted debt-to-equity ratio A solvency ratio calculated as adjusted total debt divided by adjusted total equity. International Business Machines Corp. adjusted debt-to-equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted debt-to-capital ratio A solvency ratio calculated as adjusted total debt divided by adjusted total debt plus adjusted total equity. International Business Machines Corp. adjusted debt-to-capital ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
International Business Machines Corp. adjusted financial leverage ratio decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. International Business Machines Corp. adjusted net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted total equity. International Business Machines Corp. adjusted ROE improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. International Business Machines Corp. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

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


Adjusted Total Asset Turnover

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Revenue 73,620  77,147  79,591  79,139  79,919 
Total assets 155,971  152,186  123,382  125,356  117,470 
Activity Ratio
Total asset turnover1 0.47 0.51 0.65 0.63 0.68
Adjusted
Selected Financial Data (US$ in millions)
Adjusted revenue2 74,877  78,414  78,903  79,802  79,762 
Adjusted total assets3 147,109  147,336  123,705  126,922  118,898 
Activity Ratio
Adjusted total asset turnover4 0.51 0.53 0.64 0.63 0.67

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Total asset turnover = Revenue ÷ Total assets
= 73,620 ÷ 155,971 = 0.47

2 Adjusted revenue. See details »

3 Adjusted total assets. See details »

4 2020 Calculation
Adjusted total asset turnover = Adjusted revenue ÷ Adjusted total assets
= 74,877 ÷ 147,109 = 0.51

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 deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Current Ratio

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Current assets 39,165  38,420  49,146  49,735  43,888 
Current liabilities 39,869  37,701  38,227  37,363  36,275 
Liquidity Ratio
Current ratio1 0.98 1.02 1.29 1.33 1.21
Adjusted
Selected Financial Data (US$ in millions)
Adjusted current assets2 39,544  38,752  49,493  50,068  44,226 
Adjusted current liabilities3 26,749  25,335  26,673  25,382  24,820 
Liquidity Ratio
Adjusted current ratio4 1.48 1.53 1.86 1.97 1.78

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Current ratio = Current assets ÷ Current liabilities
= 39,165 ÷ 39,869 = 0.98

2 Adjusted current assets. See details »

3 Adjusted current liabilities. See details »

4 2020 Calculation
Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 39,544 ÷ 26,749 = 1.48

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. International Business Machines Corp. adjusted current ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Debt to Equity

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Total debt 61,538  62,899  45,812  46,824  42,168 
Total IBM stockholders’ equity 20,597  20,841  16,796  17,594  18,246 
Solvency Ratio
Debt to equity1 2.99 3.02 2.73 2.66 2.31
Adjusted
Selected Financial Data (US$ in millions)
Adjusted total debt2 66,469  68,158  51,004  52,919  48,482 
Adjusted total equity3 34,979  37,832  31,018  29,758  29,253 
Solvency Ratio
Adjusted debt to equity4 1.90 1.80 1.64 1.78 1.66

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Debt to equity = Total debt ÷ Total IBM stockholders’ equity
= 61,538 ÷ 20,597 = 2.99

2 Adjusted total debt. See details »

3 Adjusted total equity. See details »

4 2020 Calculation
Adjusted debt to equity = Adjusted total debt ÷ Adjusted total equity
= 66,469 ÷ 34,979 = 1.90

Solvency ratio Description The company
Adjusted debt-to-equity ratio A solvency ratio calculated as adjusted total debt divided by adjusted total equity. International Business Machines Corp. adjusted debt-to-equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Debt to Capital

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Total debt 61,538  62,899  45,812  46,824  42,168 
Total capital 82,135  83,740  62,608  64,418  60,414 
Solvency Ratio
Debt to capital1 0.75 0.75 0.73 0.73 0.70
Adjusted
Selected Financial Data (US$ in millions)
Adjusted total debt2 66,469  68,158  51,004  52,919  48,482 
Adjusted total capital3 101,448  105,990  82,022  82,677  77,735 
Solvency Ratio
Adjusted debt to capital4 0.66 0.64 0.62 0.64 0.62

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= 61,538 ÷ 82,135 = 0.75

2 Adjusted total debt. See details »

3 Adjusted total capital. See details »

4 2020 Calculation
Adjusted debt to capital = Adjusted total debt ÷ Adjusted total capital
= 66,469 ÷ 101,448 = 0.66

Solvency ratio Description The company
Adjusted debt-to-capital ratio A solvency ratio calculated as adjusted total debt divided by adjusted total debt plus adjusted total equity. International Business Machines Corp. adjusted debt-to-capital ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Total assets 155,971  152,186  123,382  125,356  117,470 
Total IBM stockholders’ equity 20,597  20,841  16,796  17,594  18,246 
Solvency Ratio
Financial leverage1 7.57 7.30 7.35 7.12 6.44
Adjusted
Selected Financial Data (US$ in millions)
Adjusted total assets2 147,109  147,336  123,705  126,922  118,898 
Adjusted total equity3 34,979  37,832  31,018  29,758  29,253 
Solvency Ratio
Adjusted financial leverage4 4.21 3.89 3.99 4.27 4.06

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Financial leverage = Total assets ÷ Total IBM stockholders’ equity
= 155,971 ÷ 20,597 = 7.57

2 Adjusted total assets. See details »

3 Adjusted total equity. See details »

4 2020 Calculation
Adjusted financial leverage = Adjusted total assets ÷ Adjusted total equity
= 147,109 ÷ 34,979 = 4.21

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
International Business Machines Corp. adjusted financial leverage ratio decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Adjusted Net Profit Margin

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Net income attributable to IBM 5,590  9,431  8,728  5,753  11,872 
Revenue 73,620  77,147  79,591  79,139  79,919 
Profitability Ratio
Net profit margin1 7.59% 12.22% 10.97% 7.27% 14.86%
Adjusted
Selected Financial Data (US$ in millions)
Adjusted net income2 2,683  10,200  8,222  8,578  10,868 
Adjusted revenue3 74,877  78,414  78,903  79,802  79,762 
Profitability Ratio
Adjusted net profit margin4 3.58% 13.01% 10.42% 10.75% 13.63%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Net profit margin = 100 × Net income attributable to IBM ÷ Revenue
= 100 × 5,590 ÷ 73,620 = 7.59%

2 Adjusted net income. See details »

3 Adjusted revenue. See details »

4 2020 Calculation
Adjusted net profit margin = 100 × Adjusted net income ÷ Adjusted revenue
= 100 × 2,683 ÷ 74,877 = 3.58%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. International Business Machines Corp. adjusted net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Net income attributable to IBM 5,590  9,431  8,728  5,753  11,872 
Total IBM stockholders’ equity 20,597  20,841  16,796  17,594  18,246 
Profitability Ratio
ROE1 27.14% 45.25% 51.96% 32.70% 65.07%
Adjusted
Selected Financial Data (US$ in millions)
Adjusted net income2 2,683  10,200  8,222  8,578  10,868 
Adjusted total equity3 34,979  37,832  31,018  29,758  29,253 
Profitability Ratio
Adjusted ROE4 7.67% 26.96% 26.51% 28.83% 37.15%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
ROE = 100 × Net income attributable to IBM ÷ Total IBM stockholders’ equity
= 100 × 5,590 ÷ 20,597 = 27.14%

2 Adjusted net income. See details »

3 Adjusted total equity. See details »

4 2020 Calculation
Adjusted ROE = 100 × Adjusted net income ÷ Adjusted total equity
= 100 × 2,683 ÷ 34,979 = 7.67%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted total equity. International Business Machines Corp. adjusted ROE improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Reported
Selected Financial Data (US$ in millions)
Net income attributable to IBM 5,590  9,431  8,728  5,753  11,872 
Total assets 155,971  152,186  123,382  125,356  117,470 
Profitability Ratio
ROA1 3.58% 6.20% 7.07% 4.59% 10.11%
Adjusted
Selected Financial Data (US$ in millions)
Adjusted net income2 2,683  10,200  8,222  8,578  10,868 
Adjusted total assets3 147,109  147,336  123,705  126,922  118,898 
Profitability Ratio
Adjusted ROA4 1.82% 6.92% 6.65% 6.76% 9.14%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
ROA = 100 × Net income attributable to IBM ÷ Total assets
= 100 × 5,590 ÷ 155,971 = 3.58%

2 Adjusted net income. See details »

3 Adjusted total assets. See details »

4 2020 Calculation
Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 2,683 ÷ 147,109 = 1.82%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. International Business Machines Corp. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.