Microsoft Excel LibreOffice Calc

International Business Machines Corp. (IBM)


Long-term Debt and Solvency Analysis

Difficulty: Beginner


Ratios (Summary)

International Business Machines Corp., debt and solvency ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Debt to equity 2.73 2.66 2.31 2.80 3.44
Debt to capital 0.73 0.73 0.70 0.74 0.77
Interest coverage 16.71 19.56 20.60 35.09 42.31

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders’ equity. International Business Machines Corp.’s debt-to-equity ratio deteriorated from 2016 to 2017 and from 2017 to 2018.
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders’ equity. International Business Machines Corp.’s debt-to-capital ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. International Business Machines Corp.’s interest coverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Debt to Equity

International Business Machines Corp., debt to equity calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term debt 10,207  6,987  7,513  6,461  5,731 
Long-term debt 35,605  39,837  34,655  33,428  35,073 
Total debt 45,812  46,824  42,168  39,889  40,804 
Total IBM stockholders’ equity 16,796  17,594  18,246  14,262  11,868 
Ratio
Debt to equity1 2.73 2.66 2.31 2.80 3.44
Benchmarks
Debt to Equity, Competitors
Adobe Inc. 0.44 0.22 0.26 0.27 0.22
Alphabet Inc. 0.02 0.03 0.03 0.04 0.05
Facebook Inc. 0.00 0.00 0.00 0.00 0.01
Intuit Inc. 0.19 0.36 0.86 0.21 0.16
Microsoft Corp. 0.92 1.19 0.75 0.44 0.25
Oracle Corp. 1.33 1.08 0.93 0.86 0.52
salesforce.com inc. 0.18 0.27 0.26 0.34 0.62
Debt to Equity, Sector
Software & Computer Services 0.45 0.51 0.42 0.39 0.32
Debt to Equity, Industry
Technology 0.59 0.60 0.49 0.45 0.32

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

2018 Calculations

1 Debt to equity = Total debt ÷ Total IBM stockholders’ equity
= 45,812 ÷ 16,796 = 2.73

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders’ equity. International Business Machines Corp.’s debt-to-equity ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Debt to Capital

International Business Machines Corp., debt to capital calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term debt 10,207  6,987  7,513  6,461  5,731 
Long-term debt 35,605  39,837  34,655  33,428  35,073 
Total debt 45,812  46,824  42,168  39,889  40,804 
Total IBM stockholders’ equity 16,796  17,594  18,246  14,262  11,868 
Total capital 62,608  64,418  60,414  54,151  52,672 
Ratio
Debt to capital1 0.73 0.73 0.70 0.74 0.77
Benchmarks
Debt to Capital, Competitors
Adobe Inc. 0.31 0.18 0.20 0.21 0.18
Alphabet Inc. 0.02 0.03 0.03 0.04 0.05
Facebook Inc. 0.00 0.00 0.00 0.00 0.01
Intuit Inc. 0.16 0.26 0.46 0.18 0.14
Microsoft Corp. 0.48 0.54 0.43 0.31 0.20
Oracle Corp. 0.57 0.52 0.48 0.46 0.34
salesforce.com inc. 0.15 0.21 0.21 0.26 0.38
Debt to Capital, Sector
Software & Computer Services 0.31 0.34 0.30 0.28 0.24
Debt to Capital, Industry
Technology 0.37 0.37 0.33 0.31 0.24

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

2018 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 45,812 ÷ 62,608 = 0.73

Ratio Description The company
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders’ equity. International Business Machines Corp.’s debt-to-capital ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Interest Coverage

International Business Machines Corp., interest coverage calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Net income attributable to IBM 8,728  5,753  11,872  13,190  12,022 
Add: Net income attributable to noncontrolling interest 17  17  16 
Less: Income (loss) from discontinued operations, net of tax (5) (9) (174) (3,729)
Add: Income tax expense 2,619  5,642  449  2,581  4,235 
Add: Interest expense 723  615  630  468  484 
Earnings before interest and tax (EBIT) 12,082  12,032  12,976  16,421  20,476 
Ratio
Interest coverage1 16.71 19.56 20.60 35.09 42.31
Benchmarks
Interest Coverage, Competitors
Adobe Inc. 32.31 29.73 21.37 14.61 7.05
Alphabet Inc. 307.25 250.48 195.76 189.95 171.88
Facebook Inc. 2,818.89 3,433.33 1,252.80 270.30 214.48
Intuit Inc. 76.15 45.10 35.37 27.37 43.39
Microsoft Corp. 14.35 11.42 16.89 24.70 47.60
Oracle Corp. 7.43 7.47 8.88 12.33 16.10
salesforce.com inc. 3.32 1.29 1.89 -1.91 -3.64
Interest Coverage, Sector
Software & Computer Services 22.66 20.72 23.73 28.81 38.21
Interest Coverage, Industry
Technology 21.47 21.65 24.56 38.02 46.43

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-23), 10-K (filing date: 2015-02-24).

2018 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 12,082 ÷ 723 = 16.71

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. International Business Machines Corp.’s interest coverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.