Analysis of Geographic Areas
International Business Machines Corp. operates in 2 regions: United States and Other countries.
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- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Area Asset Turnover
International Business Machines Corp., asset turnover by geographic area
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| United States | |||||
| Other countries |
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 geographic area asset turnover data indicates differing trends between the United States and other countries over the five-year period.
- United States
- The asset turnover ratio in the United States showed an initial increase from 6.12 in 2020 to a peak of 7.82 in 2022. This was followed by a decline in subsequent years, reaching 6.27 by 2024. Despite the decline after 2022, the 2024 value remains slightly above the initial 2020 figure, suggesting moderate variability but relative stability overall.
- Other countries
- In contrast, the asset turnover ratio for other countries demonstrated a consistent and strong upward trend throughout the entire period. Starting at 8.43 in 2020, it nearly doubled by 2021 to 15.03, and continued to increase steadily each year, reaching 21.9 in 2024. This robust growth indicates significantly improved efficiency in asset utilization in international markets outside the United States.
- Comparative Analysis
- The data reveals a widening gap between the United States and other countries in terms of asset turnover ratios. While the U.S. market experienced some volatility and a slight decline after 2022, the international segment has shown sustained and accelerating improvement. This divergence may highlight stronger growth dynamics or strategic advantages in foreign operations compared to domestic activity.
Area Asset Turnover: United States
International Business Machines Corp.; United States; area asset turnover calculation
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenue | |||||
| Plant and other property, net | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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).
1 2024 Calculation
Area asset turnover = Revenue ÷ Plant and other property, net
= ÷ =
- Revenue Trend
- Revenue exhibited fluctuations across the analyzed periods. It decreased from $26,978 million in 2020 to $22,893 million in 2021, indicating a significant reduction. Subsequently, revenue rebounded in 2022 to $25,098 million, before experiencing modest growth to $25,309 million in 2023. In 2024, revenue slightly declined to $25,144 million, suggesting stabilization at a level below the 2020 figure.
- Plant and Other Property, Net
- The net value of plant and other property decreased notably from $4,410 million in 2020 to a low of $3,209 million in 2022. After this decline, the asset base showed recovery, rising to $3,466 million in 2023 and increasing further to $4,009 million in 2024. This pattern indicates an initial reduction in fixed assets followed by reinvestment or asset appreciation toward the end of the period.
- Area Asset Turnover Ratio
- The area asset turnover ratio improved significantly from 6.12 in 2020 to a peak of 7.82 in 2022, reflecting enhanced efficiency in using assets to generate revenue. However, after 2022, this ratio declined to 7.3 in 2023 and further to 6.27 in 2024, denoting a decrease in operational efficiency or revenue generation relative to asset base during the latter years of the period under review.
- Overall Insights
- The data suggests a period of contraction in revenue and asset base in the early years, followed by a partial recovery in both investment in property and revenue generation. The asset utilization efficiency, as measured by the area asset turnover ratio, peaked mid-period and then diminished, aligning with the trends in asset base and revenue. These patterns may reflect strategic adjustments, market conditions, or investment cycles impacting performance in the geographic area analyzed.
Area Asset Turnover: Other countries
International Business Machines Corp.; Other countries; area asset turnover calculation
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenue | |||||
| Plant and other property, net | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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).
1 2024 Calculation
Area asset turnover = Revenue ÷ Plant and other property, net
= ÷ =
The analysis of the “Other countries” geographic area data reveals several notable trends over the five-year period from December 31, 2020, to December 31, 2024. These trends focus on revenue generation, net plant and property values, and asset turnover ratios.
- Revenue
- Revenue demonstrated a significant decline from 46,642 million US dollars in 2020 to 34,457 million in 2021, reflecting a substantial drop of approximately 26%. Following this decrease, revenue stabilized with gradual incremental increases reaching 37,609 million US dollars by the end of 2024. This suggests a recovery trend after the initial sharp decrease, though revenue levels did not return to the 2020 peak within the observed period.
- Plant and Other Property, Net
- The net value of plant and other properties experienced a continuous downward trajectory over the five years. Starting at 5,533 million US dollars in 2020, the value dropped steeply to 2,293 million in 2021 and continued to decline annually, reaching 1,717 million by 2024. This decline indicates a consistent reduction in tangible fixed assets within this geographic segment, which could reflect asset disposals, impairments, or lack of reinvestment.
- Area Asset Turnover
- Asset turnover ratio has shown a strong upward trend throughout the period, increasing markedly from 8.43 in 2020 to 21.9 by the end of 2024. This ratio indicates improved efficiency in generating revenue from the asset base. The rising turnover, especially in context with decreasing plant and property assets and recovering revenues, suggests more efficient use or optimization of the assets held in this geographic area.
In summary, the data highlight a challenging initial year with revenue decline and significant asset reduction. However, the region demonstrated resilience with a slow revenue recovery and a marked improvement in asset utilization efficiency, as reflected by the steadily increasing asset turnover ratio. The diminishing plant and property net values alongside increasing turnover ratios suggest a strategic shift toward leaner asset management and possibly greater emphasis on operational efficiency or intangible asset utilization.
Revenue
International Business Machines Corp., revenue by geographic area
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| United States | |||||
| Other countries | |||||
| Total |
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).
- Revenue Trends in the United States
- The revenue in the United States showed a significant decrease from 26,978 million USD in 2020 to 22,893 million USD in 2021. This was followed by a gradual recovery in the subsequent years, rising to 25,098 million USD in 2022 and stabilizing around 25,309 million USD in 2023. However, a slight decline occurred in 2024, with revenue reaching 25,144 million USD. Overall, the revenue from the United States exhibits a pattern of initial decline, partial recovery, and then minor fluctuation in recent years.
- Revenue Trends in Other Countries
- The revenues generated from other countries dropped sharply from 46,642 million USD in 2020 to 34,457 million USD in 2021, mirroring the trend seen in the U.S. market but with a larger absolute decrease. Starting from 2022, revenues from other countries steadily increased each year, reaching 35,432 million USD, 36,551 million USD, and 37,609 million USD in 2022, 2023, and 2024, respectively. This consistent growth highlights a recovery and expansion in these markets over the last three years.
- Total Revenue Trends
- Total revenue experienced a marked decline from 73,620 million USD in 2020 to 57,350 million USD in 2021. Subsequently, total revenue showed a recovery trend, increasing to 60,530 million USD in 2022, 61,860 million USD in 2023, and 62,753 million USD in 2024. Despite the recovery, total revenue has not yet returned to the 2020 peak levels. This trend suggests an initial widespread impact affecting revenues across all regions with a gradual market stabilization and growth afterward.
- Summary
- The data indicates that both the United States and other countries experienced significant revenue declines from 2020 to 2021, likely due to external economic factors impacting the global business environment. While the U.S. market showed signs of recovery with some minor fluctuations post-2021, other countries demonstrated a steady and continuous growth trend since 2022. The total revenue pattern reflects these regional trends, with a sharp initial drop followed by a steady but moderated recovery. The consistent growth from other countries suggests a diversification effect in revenue sources, potentially balancing the slower growth in the domestic market.
Plant and other property, net
International Business Machines Corp., plant and other property, net by geographic area
US$ in millions
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| United States | |||||
| Other countries | |||||
| Total |
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).
- United States Plant and Other Property, Net
- The data shows a declining trend from 2020 through 2022, decreasing from 4,410 million US dollars in 2020 to 3,209 million US dollars in 2022. However, this trend reverses in the subsequent years with a moderate increase to 3,466 million in 2023, followed by a more pronounced rise to 4,009 million in 2024. This indicates a renewed investment or valuation improvement in the United States assets after two years of decline.
- Other Countries Plant and Other Property, Net
- The values consistently decrease throughout the entire period, starting at 5,533 million US dollars in 2020 and dropping steadily each year to reach 1,717 million by 2024. This significant and continuous reduction suggests a divestment or depreciation of plant and property assets outside the United States over the five-year period.
- Total Plant and Other Property, Net
- The total amount shows a sharp decline from 9,943 million US dollars in 2020 to 5,309 million in 2022. After 2022, the total stabilizes and modestly increases to 5,493 million in 2023 and 5,726 million in 2024. This overall pattern reflects the impact of the decreasing values outside the United States compounded with the initial drop in U.S. assets, before the slight recovery driven mainly by the U.S. segment's increase in the last two years.
- Summary
- There is a clear divergence between geographic regions. The United States shows a recovery trend after initial declines, whereas other countries exhibit a steady asset reduction. The total net plant and property value largely follows the international downward trend until 2022, with a subsequent period of stabilization and mild growth influenced by improved U.S. figures. This geographic disparity may indicate strategic shifts or varying economic conditions impacting asset values across regions.