Microsoft Excel LibreOffice Calc

International Business Machines Corp. (IBM)

Long-term Debt and Solvency Analysis

Difficulty: Beginner

Solvency ratios also known as long-term debt ratios measure a company’s ability to meet long-term obligations.

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 Ratios
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
Debt to assets 0.37 0.37 0.36 0.36 0.35
Financial leverage 7.35 7.12 6.44 7.75 9.90
Coverage Ratios
Interest coverage 16.71 19.56 20.60 35.09 42.31
Fixed charge coverage 5.26 5.69 6.77 9.21 10.63

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.
Debt to assets ratio A solvency ratio calculated as total debt divided by total assets. International Business Machines Corp.’s debt to assets ratio deteriorated from 2016 to 2017 but then slightly improved from 2017 to 2018.
Financial leverage ratio A solvency ratio calculated as total assets divided by total shareholders’ equity. International Business Machines Corp.’s financial leverage 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.
Fixed charge coverage ratio A solvency ratio calculated as earnings before fixed charges and tax divided by fixed charges. International Business Machines Corp.’s fixed charge 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 (US$ 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, Competitors2
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 0.58 0.58 0.47 0.43 0.31

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).

1 2018 Calculation
Debt to equity = Total debt ÷ Total IBM stockholders’ equity
= 45,812 ÷ 16,796 = 2.73

2 Click competitor name to see calculations.

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 (US$ 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, Competitors2
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 0.32 0.30 0.23

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).

1 2018 Calculation
Debt to capital = Total debt ÷ Total capital
= 45,812 ÷ 62,608 = 0.73

2 Click competitor name to see calculations.

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.

Debt to Assets

International Business Machines Corp., debt to assets 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 (US$ 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 assets 123,382  125,356  117,470  110,495  117,532 
Ratio
Debt to assets1 0.37 0.37 0.36 0.36 0.35
Benchmarks
Debt to Assets, Competitors2
Adobe Inc. 0.22 0.13 0.15 0.16 0.14
Alphabet Inc. 0.02 0.02 0.02 0.04 0.04
Facebook Inc. 0.00 0.00 0.00 0.00 0.01
Intuit Inc. 0.08 0.12 0.24 0.10 0.10
Microsoft Corp. 0.29 0.36 0.28 0.20 0.13
Oracle Corp. 0.44 0.43 0.39 0.38 0.27
salesforce.com inc. 0.08 0.11 0.10 0.13 0.20
Debt to Assets, Sector
Software & Computer Services 0.22 0.24 0.22 0.20 0.17
Debt to Assets, Industry
Technology 0.25 0.26 0.23 0.21 0.16

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).

1 2018 Calculation
Debt to assets = Total debt ÷ Total assets
= 45,812 ÷ 123,382 = 0.37

2 Click competitor name to see calculations.

Ratio Description The company
Debt to assets ratio A solvency ratio calculated as total debt divided by total assets. International Business Machines Corp.’s debt to assets ratio deteriorated from 2016 to 2017 but then slightly improved from 2017 to 2018.

Financial Leverage

International Business Machines Corp., financial leverage 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 (US$ in millions)
Total assets 123,382  125,356  117,470  110,495  117,532 
Total IBM stockholders’ equity 16,796  17,594  18,246  14,262  11,868 
Ratio
Financial leverage1 7.35 7.12 6.44 7.75 9.90
Benchmarks
Financial Leverage, Competitors2
Adobe Inc. 2.00 1.72 1.71 1.67 1.59
Alphabet Inc. 1.31 1.29 1.20 1.23 1.25
Facebook Inc. 1.16 1.14 1.10 1.12 1.11
Intuit Inc. 2.20 3.00 3.66 2.13 1.69
Microsoft Corp. 3.13 3.33 2.69 2.20 1.92
Oracle Corp. 3.00 2.51 2.37 2.28 1.93
salesforce.com inc. 2.24 2.34 2.55 2.69 3.01
Financial Leverage, Sector
Software & Computer Services 2.09 2.11 1.96 1.94 1.91
Financial Leverage, Industry
Technology 2.31 2.20 2.03 1.99 1.87

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).

1 2018 Calculation
Financial leverage = Total assets ÷ Total IBM stockholders’ equity
= 123,382 ÷ 16,796 = 7.35

2 Click competitor name to see calculations.

Ratio Description The company
Financial leverage ratio A solvency ratio calculated as total assets divided by total shareholders’ equity. International Business Machines Corp.’s financial leverage 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 (US$ 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  8  6 
Less: Income (loss) from discontinued operations, net of tax 5  (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, Competitors2
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 21.75 21.96 24.91 39.54 48.86

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).

1 2018 Calculation
Interest coverage = EBIT ÷ Interest expense
= 12,082 ÷ 723 = 16.71

2 Click competitor name to see calculations.

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.

Fixed Charge Coverage

International Business Machines Corp., fixed charge 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 (US$ 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  8  6 
Less: Income (loss) from discontinued operations, net of tax 5  (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 
Add: Rental expense 1,944  1,821  1,508  1,474  1,592 
Earnings before fixed charges and tax 14,026  13,853  14,484  17,895  22,068 
 
Interest expense 723  615  630  468  484 
Rental expense 1,944  1,821  1,508  1,474  1,592 
Fixed charges 2,667  2,436  2,138  1,942  2,076 
Ratio
Fixed charge coverage1 5.26 5.69 6.77 9.21 10.63
Benchmarks
Fixed Charge Coverage, Competitors2
Adobe Inc. 13.34 12.26 9.79 6.56 3.11
Alphabet Inc. 25.69 23.49 24.65 12.49 26.72
Facebook Inc. 40.75 56.81 45.87 31.36 34.18
Intuit Inc. 26.91 22.03 17.94 9.28 15.93
Microsoft Corp. 9.45 7.57 9.81 11.46 19.91
Oracle Corp. 6.38 6.39 7.44 9.76 12.07
salesforce.com inc. 1.54 1.08 1.26 0.10 -0.78
Fixed Charge Coverage, Sector
Software & Computer Services 11.37 10.50 11.43 11.03 15.01
Fixed Charge Coverage, Industry
Technology 13.10 12.92 14.02 17.44 20.38

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).

1 2018 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 14,026 ÷ 2,667 = 5.26

2 Click competitor name to see calculations.

Ratio Description The company
Fixed charge coverage ratio A solvency ratio calculated as earnings before fixed charges and tax divided by fixed charges. International Business Machines Corp.’s fixed charge coverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.