Microsoft Excel LibreOffice Calc

Long-term Debt and Solvency Analysis

Difficulty: Beginner


Ratios (Summary)

International Business Machines Corp., debt and solvency ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Debt to equity 2.66 2.31 2.80 3.44 1.74
Debt to capital 0.73 0.70 0.74 0.77 0.64
Interest coverage 19.56 20.60 35.09 42.31 49.58

Based on: 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), 10-K (filing date: 2014-02-25).

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 improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.
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 improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.

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 2015 to 2016 and from 2016 to 2017.

Debt to Equity

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Short-term debt 6,987  7,513  6,461  5,731  6,862 
Long-term debt 39,837  34,655  33,428  35,073  32,856 
Total debt 46,824  42,168  39,889  40,804  39,718 
Total IBM stockholders' equity 17,594  18,246  14,262  11,868  22,792 
Ratio
Debt to equity1 2.66 2.31 2.80 3.44 1.74
Benchmarks
Debt to Equity, Competitors
Adobe Systems Inc. 0.22 0.26 0.27 0.22 0.23
Alphabet Inc. 0.03 0.03 0.04 0.05 0.06
Facebook Inc. 0.00 0.00 0.00 0.01 0.03
Microsoft Corp. 1.19 0.75 0.44 0.25 0.20
Oracle Corp. 1.08 0.93 0.86 0.52 0.41
salesforce.com inc. 0.27 0.26 0.34 0.62 0.22
Debt to Equity, Sector
Software & Computer Services 0.51 0.42 0.39 0.32 0.32
Debt to Equity, Industry
Technology 0.60 0.49 0.45 0.32 0.27

Based on: 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), 10-K (filing date: 2014-02-25).

2017 Calculations

1 Debt to equity = Total debt ÷ Total IBM stockholders' equity
= 46,824 ÷ 17,594 = 2.66

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 improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.

Debt to Capital

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Short-term debt 6,987  7,513  6,461  5,731  6,862 
Long-term debt 39,837  34,655  33,428  35,073  32,856 
Total debt 46,824  42,168  39,889  40,804  39,718 
Total IBM stockholders' equity 17,594  18,246  14,262  11,868  22,792 
Total capital 64,418  60,414  54,151  52,672  62,510 
Ratio
Debt to capital1 0.73 0.70 0.74 0.77 0.64
Benchmarks
Debt to Capital, Competitors
Adobe Systems Inc. 0.18 0.20 0.21 0.18 0.18
Alphabet Inc. 0.03 0.03 0.04 0.05 0.06
Facebook Inc. 0.00 0.00 0.00 0.01 0.03
Microsoft Corp. 0.54 0.43 0.31 0.20 0.17
Oracle Corp. 0.52 0.48 0.46 0.34 0.29
salesforce.com inc. 0.21 0.21 0.26 0.38 0.18
Debt to Capital, Sector
Software & Computer Services 0.34 0.30 0.28 0.24 0.24
Debt to Capital, Industry
Technology 0.37 0.33 0.31 0.24 0.21

Based on: 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), 10-K (filing date: 2014-02-25).

2017 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 46,824 ÷ 64,418 = 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 improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.

Interest Coverage

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

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Net income attributable to IBM 5,753  11,872  13,190  12,022  16,483 
Add: Net income attributable to noncontrolling interest 17  16 
Less: Loss from discontinued operations, net of tax (5) (9) (174) (3,729) – 
Add: Income tax expense 5,642  449  2,581  4,235  3,041 
Add: Interest expense 615  630  468  484  402 
Earnings before interest and tax (EBIT) 12,032  12,976  16,421  20,476  19,933 
Ratio
Interest coverage1 19.56 20.60 35.09 42.31 49.58
Benchmarks
Interest Coverage, Competitors
Adobe Systems Inc. 29.73 21.37 14.61 7.05 6.28
Alphabet Inc. 250.48 195.76 189.95 171.88 175.65
Facebook Inc. 3,433.33 1,252.80 270.30 214.48 50.18
Microsoft Corp. 11.42 16.89 24.70 47.60 64.06
Oracle Corp. 7.47 8.88 12.33 16.10 18.58
salesforce.com inc. 1.29 1.89 -1.91 -3.64 -3.13
Interest Coverage, Sector
Software & Computer Services 20.57 23.62 28.82 38.14 42.85
Interest Coverage, Industry
Technology 21.58 24.52 38.08 46.46 50.27

Based on: 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), 10-K (filing date: 2014-02-25).

2017 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 12,032 ÷ 615 = 19.56

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 2015 to 2016 and from 2016 to 2017.