International Business Machines Corp. (NYSE:IBM)

Current Ratio

The current ratio showed relative stability with fluctuations between 0.84 and 0.95 during 2021 and 2022. A notable spike occurred in the first quarter of 2023, reaching 1.16, marking the highest liquidity level in the period analyzed. Following this peak, the ratio maintained levels slightly above or around 1.00 throughout 2023 and early 2024, indicating an improvement in short-term asset coverage relative to current liabilities. However, from mid-2024 through 2025, a gradual decline is observed, with the ratio dropping to 0.91 by mid-2025, suggesting a mild tightening of liquidity in recent quarters.

Quick Ratio

The quick ratio largely mirrored the current ratio trend but remained consistently lower, reflecting the exclusion of less liquid current assets such as inventory. Starting below 0.70 in 2021, the ratio experienced a significant increase in early 2023, peaking at 0.99, which denotes improved immediate liquidity without reliance on inventory. Post-peak, the quick ratio experienced a downward adjustment but remained near 0.90 through much of 2023 and early 2024. In the later periods (mid-2024 to 2025), the ratio showed a gradual decline, ending close to 0.77–0.78, highlighting a slight moderation in quick asset coverage.

Cash Ratio

The cash ratio exhibited more pronounced volatility compared to the other liquidity measures, reflecting greater sensitivity to cash and cash equivalents fluctuations. It remained relatively low, fluctuating around 0.22 to 0.32 through 2021 and 2022, indicating limited cash reserves relative to current liabilities. Early 2023 marked a substantial jump, reaching 0.57 in Q1, more than doubling previous levels and reflecting a strategic buildup of cash or cash equivalents. This elevated level was somewhat sustained into 2024, with figures generally between 0.50 and 0.60. However, a slight decline occurred from mid-2024 through 2025, with the cash ratio trending downward to approximately 0.41 by Q3 2025, suggesting a modest reduction in cash holdings relative to short-term obligations.

Overall Liquidity Trend

Across all three ratios, there is a clear pattern of liquidity strengthening in early 2023, marked by peaks across current, quick, and cash ratios. This suggests a deliberate effort or favorable conditions leading to improved asset liquidity and cash reserves. Following this period, a gradual normalization or mild reduction in liquidity ratios is observed, yet they generally remain at levels higher than those recorded prior to 2023. This indicates a longer-term enhancement in short-term financial flexibility compared to earlier years, despite some retracement in recent quarters. The company's liquidity management appears dynamic, responding to changing operational or market conditions with periods of both accumulation and cautious drawdown of liquid resources.

The analysis of the quarterly financial data reveals several notable trends in current assets, current liabilities, and the resulting current ratio over the observed periods.

Current Assets

Current assets show a fluctuating pattern throughout the periods. Initially, there is a decline from approximately 34,038 million US dollars to a low near 27,896 million by mid-2022. Subsequently, current assets recover strongly reaching a peak close to 36,663 million at the first quarter of 2024. This is followed by a gradual decline towards the later periods, ending near 32,740 million at the first quarter of 2025. The general movement suggests volatility but with periods of recovery and growth interspersed with declines.

Current Liabilities

Current liabilities tend to maintain a relatively high and steady level with some fluctuations. Starting near 36,542 million US dollars, liabilities dip somewhat toward the end of 2021 and early 2022, hitting lows around 28,853 million. From mid-2023 onward, liabilities increase substantially, peaking near 37,726 million by mid-2025. This upward trend in liabilities during recent periods may indicate increased short-term obligations or expenses.

Current Ratio

The current ratio exhibits significant variability reflective of changes in assets and liabilities. Early periods show ratios below 1.0, indicating current liabilities exceeding current assets, with values ranging mostly from 0.84 to 0.95. Entering 2023, the ratio improves notably, surpassing 1.1 in two quarters, implying better short-term liquidity and coverage of liabilities by assets. However, in the latter part of the data, the ratio declines again, falling close to 0.91–0.93 by the first quarter of 2025.

Overall, the current ratio's movement indicates fluctuating liquidity conditions, with intermittent improvements in asset coverage of liabilities but a tendency to revert to tighter liquidity levels. The increase in liabilities in recent quarters alongside the decline in current assets has pressured this ratio downward.

The analysis of the quarterly financial data reveals several key trends in the liquidity position of the subject company over the examined periods.

Total quick assets

The total quick assets exhibit notable fluctuations throughout the timeframe. Initially, quick assets decreased from approximately 27.3 billion USD at the end of the first quarter of 2021 to around 23 billion USD by the third quarter of 2021. Following a brief recovery to nearly 24 billion USD at the year-end 2021, a similar downward movement was observed in the first half of 2022. From mid-2022 onwards, the total quick assets have generally increased, reaching peaks close to 31.6 billion USD by the first quarter of 2024, albeit with intermittent declines in subsequent quarters. The trend suggests periods of asset accumulation interspersed with occasional drawdowns.

Current liabilities

Current liabilities remained relatively high throughout the observed quarters, beginning around 36.5 billion USD in early 2021 and demonstrating some volatility. There was a declining trend through the end of 2021 and the first half of 2022, with liabilities falling to roughly 30.5 billion USD. However, a reversal was evident from late 2022 to mid-2025, with liabilities rising to peak near 37.7 billion USD in the middle of 2025. This increase in current liabilities during the latter periods indicates higher short-term obligations.

Quick ratio

The quick ratio, a critical measure of short-term liquidity, ranged between 0.64 and 0.99 throughout the quarters analyzed. The lowest ratios were noted around mid to late 2021, reflecting relatively constrained liquidity. Beginning in early 2023, the quick ratio improved substantially, peaking near 0.99 in March 2023, indicating stronger liquidity coverage of current liabilities by quick assets. Despite subsequent declines, the ratio remained generally higher than in previous years, staying between approximately 0.77 and 0.95, which points to a moderately improved liquidity position. The quick ratio consistently remained below 1 throughout, signaling that quick assets were insufficient to fully cover current liabilities at any point.

Overall, the company's liquidity dynamics depict a moderately volatile environment with fluctuating quick assets and current liabilities. The improvement in the quick ratio in recent quarters suggests enhanced ability to meet short-term obligations, although the ratio consistently staying below 1 highlights potential liquidity risk that warrants continued monitoring.

Total Cash Assets

The total cash assets exhibit a fluctuating pattern over the reported quarters. Initially, cash assets declined from approximately 11,273 million USD in the first quarter of 2021 to a low near 7,557 million USD by the end of that year. This was followed by a recovery phase in 2022, with values oscillating between roughly 7,778 and 9,728 million USD. A significant increase is observed starting in the first quarter of 2023, peaking at around 19,277 million USD in March 2024. Subsequently, cash assets declined somewhat but remained elevated relative to earlier periods, stabilizing between approximately 13,719 and 17,591 million USD through late 2024 and into early 2025.

Current Liabilities

Current liabilities demonstrate a general downward trend from early 2021 through late 2024, dropping from roughly 36,542 million USD to a low near 28,853 million USD in the third quarter of 2024. However, this trend reverses beginning in the latter part of 2024, with current liabilities increasing again to around 37,726 million USD by the middle of 2025. This recent uptick suggests increased short-term obligations following a period of reduction.

Cash Ratio

The cash ratio, defined as cash and cash equivalents divided by current liabilities, reflects improved liquidity primarily from 2023 onward. The ratio was relatively low and stable around 0.22 to 0.32 throughout 2021 and 2022. Starting in early 2023, a sharp increase in the ratio to approximately 0.57 indicates a stronger cash position relative to liabilities. Although the ratio subsequently fluctuates, it generally remains elevated above historical levels, consistently ranging between 0.39 and 0.6 through 2024, before moderating slightly to values around 0.41 to 0.5 in 2025. This pattern points to a notable enhancement in the company's short-term financial flexibility over the latter part of the period analyzed.