Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
International Business Machines Corp., solvency ratios
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).
- Debt to equity
- The debt to equity ratio shows a generally declining trend from 2.99 in 2020 to 2.01 in 2024, indicating a reduction in leverage relative to shareholders' equity over the period. There is a slight increase observed in 2023 to 2.51 after a previous downward trend.
- Debt to equity (including operating lease liability)
- This ratio follows a similar pattern to the debt to equity ratio, starting at 3.23 in 2020 and declining to 2.14 in 2024. The inclusion of operating lease liabilities consistently increases the ratio, but trendwise, it also shows a decrease with a minor uptick in 2023.
- Debt to capital
- Debt to capital steadily decreases from 0.75 in 2020 to 0.67 in 2024, indicating a gradual decline in debt relative to the total capital structure. There is a small increase in 2023 to 0.72 after a prior decline.
- Debt to capital (including operating lease liability)
- This measure, which accounts for lease liabilities, follows a closely similar trend as debt to capital, declining from 0.76 in 2020 to 0.68 in 2024 with a slight increase in 2023, suggesting consistent leverage reduction when including lease obligations.
- Debt to assets
- The debt to assets ratio remains fairly stable with minor fluctuations, starting at 0.39 in 2020, peaking slightly at 0.42 in 2023, and settling back to 0.40 in 2024. This suggests that the proportion of assets financed by debt remains relatively constant over the period.
- Debt to assets (including operating lease liability)
- Inclusion of operating lease liabilities results in a consistently higher ratio, ranging from 0.43 in 2020 to 0.43 in 2024, with a slight increase to 0.44 in 2023. This supports the observation of stable asset financing levels inclusive of lease obligations.
- Financial leverage
- Financial leverage shows a notable decline from 7.57 in 2020 to 5.02 in 2024, reflecting a reduction in the use of debt relative to equity and retained earnings. A slight rebound occurs in 2023 but the overall trend is downward, indicating improved capital structure strength.
- Interest coverage
- The interest coverage ratio displays volatility. It improved from 4.62 in 2020 to 5.20 in 2021, dropped sharply to 1.97 in 2022, then rose significantly to 6.42 in 2023 before declining again to 4.40 in 2024. This suggests fluctuating ability to service interest expenses, potentially due to varying earnings or interest costs.
- Fixed charge coverage
- Similar to interest coverage, fixed charge coverage fluctuates considerably. It improved from 2.62 in 2020 to 3.13 in 2021, fell to 1.52 in 2022, increased sharply to 4.32 in 2023, and then reduced to 3.13 in 2024. The changes imply variable capacity to meet fixed financial obligations beyond interest alone.
Debt Ratios
Coverage Ratios
Debt to Equity
International Business Machines Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 5,089) | 6,426) | 4,760) | 6,787) | 7,183) | |
| Long-term debt, excluding current maturities | 49,884) | 50,121) | 46,189) | 44,917) | 54,355) | |
| Total debt | 54,973) | 56,547) | 50,949) | 51,704) | 61,538) | |
| Total IBM stockholders’ equity | 27,307) | 22,533) | 21,944) | 18,901) | 20,597) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 2.01 | 2.51 | 2.32 | 2.74 | 2.99 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Accenture PLC | 0.04 | 0.01 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | 0.40 | 0.22 | 0.29 | 0.28 | 0.31 | |
| Cadence Design Systems Inc. | 0.53 | 0.19 | 0.27 | 0.13 | 0.14 | |
| CrowdStrike Holdings Inc. | 0.32 | 0.51 | 0.72 | 0.85 | 0.00 | |
| Fair Isaac Corp. | — | — | — | — | 2.54 | |
| Intuit Inc. | 0.33 | 0.35 | 0.42 | 0.21 | 0.66 | |
| Microsoft Corp. | 0.29 | 0.31 | 0.39 | 0.50 | 0.62 | |
| Oracle Corp. | 9.98 | 84.33 | — | 16.08 | 5.93 | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.00 | 0.00 | 0.13 | |
| Palo Alto Networks Inc. | 0.19 | 1.14 | 17.51 | 5.08 | 2.80 | |
| Salesforce Inc. | 0.17 | 0.20 | 0.19 | 0.07 | 0.09 | |
| ServiceNow Inc. | 0.15 | 0.20 | 0.30 | 0.43 | 0.58 | |
| Synopsys Inc. | 0.00 | 0.00 | 0.00 | 0.02 | 0.03 | |
| Workday Inc. | 0.37 | 0.53 | 0.41 | 0.55 | 0.51 | |
| Debt to Equity, Sector | ||||||
| Software & Services | 0.54 | 0.64 | 0.71 | 0.83 | 0.95 | |
| Debt to Equity, Industry | ||||||
| Information Technology | 0.61 | 0.66 | 0.71 | 0.83 | 0.97 | |
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
Debt to equity = Total debt ÷ Total IBM stockholders’ equity
= 54,973 ÷ 27,307 = 2.01
2 Click competitor name to see calculations.
The financial data reveals notable trends in the company's capital structure over the five-year period ending in 2024. Total debt shows a decreasing pattern initially, falling from $61,538 million in 2020 to $50,949 million in 2022, indicating a reduction in leverage or repayment of debt during this period. However, from 2022 onward, debt levels increased to $56,547 million in 2023 before slightly decreasing again to $54,973 million in 2024. This fluctuation suggests some level of re-leveraging or additional borrowing after initial debt reduction.
Total stockholders' equity exhibits an overall upward trend despite some fluctuations. Equity declined from $20,597 million in 2020 to $18,901 million in 2021, which could reflect losses, share repurchases, or dividends exceeding earnings. From 2021 forward, equity increased steadily to $27,307 million by 2024, indicating growth in retained earnings or potential equity issuance that strengthened the company's net worth.
The debt to equity ratio consistently declined over the examined period, moving from 2.99 in 2020 to 2.01 in 2024. This ratio decrease primarily results from the growth in equity coupled with the net reduction in debt levels over time. A lower debt to equity ratio suggests a shift toward a more balanced and potentially less risky capital structure, which generally enhances financial stability and may improve creditworthiness.
- Total Debt
- Decreased between 2020 and 2022, followed by an increase in 2023, then a slight decline in 2024.
- Total Stockholders’ Equity
- Initially declined in 2021 but then showed consistent growth through 2024, ending at the highest level in the period.
- Debt to Equity Ratio
- Displayed a downward trend throughout the period, indicating reduced leverage and improved equity financing relative to debt.
In summary, the company's financial leverage has diminished over the five years, supported by increasing equity and controlled debt levels. This improvement in the capital structure suggests a strategic focus on strengthening the balance sheet and potentially lowering financial risk.
Debt to Equity (including Operating Lease Liability)
International Business Machines Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 5,089) | 6,426) | 4,760) | 6,787) | 7,183) | |
| Long-term debt, excluding current maturities | 49,884) | 50,121) | 46,189) | 44,917) | 54,355) | |
| Total debt | 54,973) | 56,547) | 50,949) | 51,704) | 61,538) | |
| Current operating lease liabilities | 768) | 820) | 874) | 974) | 1,357) | |
| Noncurrent operating lease liabilities | 2,655) | 2,568) | 2,190) | 2,462) | 3,574) | |
| Total debt (including operating lease liability) | 58,396) | 59,935) | 54,013) | 55,140) | 66,469) | |
| Total IBM stockholders’ equity | 27,307) | 22,533) | 21,944) | 18,901) | 20,597) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 2.14 | 2.66 | 2.46 | 2.92 | 3.23 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.15 | 0.12 | 0.15 | 0.18 | 0.21 | |
| Adobe Inc. | 0.43 | 0.25 | 0.33 | 0.32 | 0.35 | |
| Cadence Design Systems Inc. | 0.56 | 0.24 | 0.34 | 0.18 | 0.20 | |
| CrowdStrike Holdings Inc. | 0.34 | 0.54 | 0.76 | 0.89 | 0.00 | |
| Fair Isaac Corp. | — | — | — | — | 2.83 | |
| Intuit Inc. | 0.36 | 0.39 | 0.46 | 0.25 | 0.71 | |
| Microsoft Corp. | 0.36 | 0.39 | 0.47 | 0.58 | 0.69 | |
| Oracle Corp. | 10.85 | 88.84 | — | 16.61 | 6.10 | |
| Palantir Technologies Inc. | 0.05 | 0.07 | 0.10 | 0.11 | 0.30 | |
| Palo Alto Networks Inc. | 0.27 | 1.33 | 19.12 | 5.68 | 3.16 | |
| Salesforce Inc. | 0.23 | 0.25 | 0.25 | 0.15 | 0.18 | |
| ServiceNow Inc. | 0.24 | 0.30 | 0.44 | 0.60 | 0.75 | |
| Synopsys Inc. | 0.08 | 0.11 | 0.12 | 0.13 | 0.14 | |
| Workday Inc. | 0.41 | 0.58 | 0.46 | 0.68 | 0.63 | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.63 | 0.73 | 0.81 | 0.94 | 1.06 | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.67 | 0.73 | 0.77 | 0.91 | 1.04 | |
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
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total IBM stockholders’ equity
= 58,396 ÷ 27,307 = 2.14
2 Click competitor name to see calculations.
- Total debt (including operating lease liability)
- The total debt exhibited a general downward trend from 66,469 million USD in 2020 to 54,013 million USD in 2022, representing a significant reduction over the two-year period. However, in 2023, there was a notable increase to 59,935 million USD, followed by a slight decline to 58,396 million USD in 2024. This pattern suggests an initial commitment to debt reduction which was partially reversed in the subsequent years.
- Total IBM stockholders’ equity
- Stockholders’ equity demonstrated a decreasing trend between 2020 and 2021, declining from 20,597 million USD to 18,901 million USD. Afterward, it increased fairly consistently, rising to 21,944 million USD in 2022, 22,533 million USD in 2023, and further to 27,307 million USD by 2024. This upward trajectory following 2021 indicates an improvement in equity, enhancing the company’s net asset base.
- Debt to equity ratio (including operating lease liability)
- The debt to equity ratio declined substantially over the analyzed period, starting at 3.23 in 2020 and decreasing to 2.14 by 2024. Despite an uptick in debt levels during 2023, this ratio’s consistent decrease reflects that the growth in stockholders’ equity outpaced total debt growth, resulting in reduced financial leverage and potentially lower risk for creditors and investors.
Debt to Capital
International Business Machines Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 5,089) | 6,426) | 4,760) | 6,787) | 7,183) | |
| Long-term debt, excluding current maturities | 49,884) | 50,121) | 46,189) | 44,917) | 54,355) | |
| Total debt | 54,973) | 56,547) | 50,949) | 51,704) | 61,538) | |
| Total IBM stockholders’ equity | 27,307) | 22,533) | 21,944) | 18,901) | 20,597) | |
| Total capital | 82,280) | 79,080) | 72,893) | 70,605) | 82,135) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.67 | 0.72 | 0.70 | 0.73 | 0.75 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Accenture PLC | 0.03 | 0.01 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | 0.29 | 0.18 | 0.23 | 0.22 | 0.24 | |
| Cadence Design Systems Inc. | 0.35 | 0.16 | 0.21 | 0.11 | 0.12 | |
| CrowdStrike Holdings Inc. | 0.24 | 0.34 | 0.42 | 0.46 | 0.00 | |
| Fair Isaac Corp. | 1.77 | 1.59 | 1.76 | 1.10 | 0.72 | |
| Intuit Inc. | 0.25 | 0.26 | 0.30 | 0.17 | 0.40 | |
| Microsoft Corp. | 0.23 | 0.24 | 0.28 | 0.33 | 0.38 | |
| Oracle Corp. | 0.91 | 0.99 | 1.09 | 0.94 | 0.86 | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.00 | 0.00 | 0.12 | |
| Palo Alto Networks Inc. | 0.16 | 0.53 | 0.95 | 0.84 | 0.74 | |
| Salesforce Inc. | 0.15 | 0.16 | 0.16 | 0.06 | 0.08 | |
| ServiceNow Inc. | 0.13 | 0.16 | 0.23 | 0.30 | 0.37 | |
| Synopsys Inc. | 0.00 | 0.00 | 0.00 | 0.02 | 0.03 | |
| Workday Inc. | 0.27 | 0.35 | 0.29 | 0.35 | 0.34 | |
| Debt to Capital, Sector | ||||||
| Software & Services | 0.35 | 0.39 | 0.42 | 0.45 | 0.49 | |
| Debt to Capital, Industry | ||||||
| Information Technology | 0.38 | 0.40 | 0.41 | 0.45 | 0.49 | |
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
Debt to capital = Total debt ÷ Total capital
= 54,973 ÷ 82,280 = 0.67
2 Click competitor name to see calculations.
- Total Debt
- There is a noticeable decrease in total debt from 61,538 million USD in 2020 to 50,949 million USD in 2022, followed by a rise to 56,547 million USD in 2023, and then a slight decrease to 54,973 million USD in 2024. This indicates an overall downward trend in debt over the five-year period with some fluctuations.
- Total Capital
- Total capital shows a declining trend initially from 82,135 million USD in 2020 to 70,605 million USD in 2021, then recovers gradually to 72,893 million USD in 2022, and continues to increase in the following years reaching 82,280 million USD by 2024. The capital base demonstrates resilience and growth after an initial contraction.
- Debt to Capital Ratio
- The debt to capital ratio decreases progressively from 0.75 in 2020 to 0.67 in 2024, with minor volatility in 2023 at 0.72. This declining ratio suggests improved capital structure and a reduction in relative debt burden, reflecting a strengthening financial position over the observed period.
Debt to Capital (including Operating Lease Liability)
International Business Machines Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 5,089) | 6,426) | 4,760) | 6,787) | 7,183) | |
| Long-term debt, excluding current maturities | 49,884) | 50,121) | 46,189) | 44,917) | 54,355) | |
| Total debt | 54,973) | 56,547) | 50,949) | 51,704) | 61,538) | |
| Current operating lease liabilities | 768) | 820) | 874) | 974) | 1,357) | |
| Noncurrent operating lease liabilities | 2,655) | 2,568) | 2,190) | 2,462) | 3,574) | |
| Total debt (including operating lease liability) | 58,396) | 59,935) | 54,013) | 55,140) | 66,469) | |
| Total IBM stockholders’ equity | 27,307) | 22,533) | 21,944) | 18,901) | 20,597) | |
| Total capital (including operating lease liability) | 85,703) | 82,468) | 75,957) | 74,041) | 87,066) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.68 | 0.73 | 0.71 | 0.74 | 0.76 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.13 | 0.11 | 0.13 | 0.15 | 0.17 | |
| Adobe Inc. | 0.30 | 0.20 | 0.25 | 0.24 | 0.26 | |
| Cadence Design Systems Inc. | 0.36 | 0.19 | 0.25 | 0.15 | 0.17 | |
| CrowdStrike Holdings Inc. | 0.26 | 0.35 | 0.43 | 0.47 | 0.00 | |
| Fair Isaac Corp. | 1.75 | 1.57 | 1.72 | 1.09 | 0.74 | |
| Intuit Inc. | 0.26 | 0.28 | 0.31 | 0.20 | 0.42 | |
| Microsoft Corp. | 0.27 | 0.28 | 0.32 | 0.37 | 0.41 | |
| Oracle Corp. | 0.92 | 0.99 | 1.08 | 0.94 | 0.86 | |
| Palantir Technologies Inc. | 0.05 | 0.06 | 0.09 | 0.10 | 0.23 | |
| Palo Alto Networks Inc. | 0.21 | 0.57 | 0.95 | 0.85 | 0.76 | |
| Salesforce Inc. | 0.19 | 0.20 | 0.20 | 0.13 | 0.16 | |
| ServiceNow Inc. | 0.19 | 0.23 | 0.31 | 0.37 | 0.43 | |
| Synopsys Inc. | 0.07 | 0.10 | 0.11 | 0.11 | 0.12 | |
| Workday Inc. | 0.29 | 0.37 | 0.32 | 0.41 | 0.39 | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.39 | 0.42 | 0.45 | 0.48 | 0.51 | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.40 | 0.42 | 0.44 | 0.48 | 0.51 | |
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
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 58,396 ÷ 85,703 = 0.68
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
-
The total debt experienced a notable decline from 66,469 million US dollars in 2020 to 55,140 million US dollars in 2021, indicating a reduction in debt obligations. This downward trend continued slightly into 2022, reaching 54,013 million US dollars. However, debt levels rose again in 2023 to 59,935 million US dollars before slightly decreasing to 58,396 million US dollars in 2024. Overall, there is a downward trend from 2020 to 2024, with some fluctuations during the mid-period.
- Total Capital (including operating lease liability)
-
Total capital decreased from 87,066 million US dollars in 2020 to 74,041 million US dollars in 2021, reflecting a contraction in the capital base during that period. This value increased modestly to 75,957 million US dollars in 2022 and continued an upward trajectory through 2023, reaching 82,468 million US dollars. The capital further expanded to 85,703 million US dollars in 2024, approaching the initial 2020 levels. This suggests a recovery and strengthening of the capital structure over recent years.
- Debt to Capital Ratio (including operating lease liability)
-
The debt to capital ratio showed a gradual decline from 0.76 in 2020 to 0.74 in 2021, and further to 0.71 in 2022, suggesting an improving balance between debt and capital, with less reliance on debt financing. The ratio increased slightly to 0.73 in 2023, indicating a small uptick in debt relative to capital. By 2024, the ratio decreased again to 0.68, representing the lowest point in the five-year period and a significant reduction in leverage. This trend implies a strengthening of the company's capital structure with a reduced proportion of debt financing over time.
Debt to Assets
International Business Machines Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 5,089) | 6,426) | 4,760) | 6,787) | 7,183) | |
| Long-term debt, excluding current maturities | 49,884) | 50,121) | 46,189) | 44,917) | 54,355) | |
| Total debt | 54,973) | 56,547) | 50,949) | 51,704) | 61,538) | |
| Total assets | 137,175) | 135,241) | 127,243) | 132,001) | 155,971) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.40 | 0.42 | 0.40 | 0.39 | 0.39 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Accenture PLC | 0.02 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Adobe Inc. | 0.19 | 0.12 | 0.15 | 0.15 | 0.17 | |
| Cadence Design Systems Inc. | 0.28 | 0.11 | 0.15 | 0.08 | 0.09 | |
| CrowdStrike Holdings Inc. | 0.11 | 0.15 | 0.20 | 0.27 | 0.00 | |
| Fair Isaac Corp. | 1.29 | 1.18 | 1.29 | 0.80 | 0.52 | |
| Intuit Inc. | 0.19 | 0.22 | 0.25 | 0.13 | 0.31 | |
| Microsoft Corp. | 0.15 | 0.16 | 0.18 | 0.21 | 0.24 | |
| Oracle Corp. | 0.62 | 0.67 | 0.69 | 0.64 | 0.62 | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.00 | 0.00 | 0.07 | |
| Palo Alto Networks Inc. | 0.05 | 0.14 | 0.30 | 0.31 | 0.34 | |
| Salesforce Inc. | 0.10 | 0.12 | 0.12 | 0.04 | 0.06 | |
| ServiceNow Inc. | 0.07 | 0.09 | 0.11 | 0.15 | 0.19 | |
| Synopsys Inc. | 0.00 | 0.00 | 0.00 | 0.01 | 0.02 | |
| Workday Inc. | 0.18 | 0.22 | 0.18 | 0.21 | 0.19 | |
| Debt to Assets, Sector | ||||||
| Software & Services | 0.23 | 0.25 | 0.26 | 0.28 | 0.30 | |
| Debt to Assets, Industry | ||||||
| Information Technology | 0.25 | 0.26 | 0.26 | 0.29 | 0.31 | |
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
Debt to assets = Total debt ÷ Total assets
= 54,973 ÷ 137,175 = 0.40
2 Click competitor name to see calculations.
The financial data indicates notable fluctuations in the company's debt and asset figures over the five-year period ending in 2024. Total debt decreased from 61,538 million US dollars in 2020 to 50,949 million in 2022, reflecting a significant reduction. However, debt levels rose again in 2023 to 56,547 million before slightly declining to 54,973 million in 2024. This pattern suggests an initial strategy to lower debt, followed by incremental borrowing or accrual of debt in the subsequent years.
Total assets exhibited a declining trend from 155,971 million US dollars in 2020 to 127,243 million in 2022. This represents a pronounced contraction in asset base over the first three years. Following this period, total assets increased moderately in 2023 and 2024, reaching 137,175 million by the end of 2024. This recovery may indicate asset acquisition, reinvestment, or valuation improvements in recent years.
The debt-to-assets ratio remained relatively stable, fluctuating narrowly between 0.39 and 0.42 during the observed period. Starting at 0.39 in 2020 and 2021, the ratio increased slightly to 0.40 in 2022 and 0.42 in 2023 before retreating back to 0.40 in 2024. This stability suggests the company maintained a consistent balance between its leverage and asset base despite the underlying variations in the absolute figures of debt and assets.
- Total Debt
- Decreased substantially from 2020 to 2022, then increased in 2023 and slightly decreased in 2024.
- Total Assets
- Contracted notably from 2020 to 2022, followed by moderate growth in the final two years.
- Debt to Assets Ratio
- Remained mostly stable throughout the period, indicating a consistent leverage level relative to assets despite the shifts in debt and asset values.
Debt to Assets (including Operating Lease Liability)
International Business Machines Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 5,089) | 6,426) | 4,760) | 6,787) | 7,183) | |
| Long-term debt, excluding current maturities | 49,884) | 50,121) | 46,189) | 44,917) | 54,355) | |
| Total debt | 54,973) | 56,547) | 50,949) | 51,704) | 61,538) | |
| Current operating lease liabilities | 768) | 820) | 874) | 974) | 1,357) | |
| Noncurrent operating lease liabilities | 2,655) | 2,568) | 2,190) | 2,462) | 3,574) | |
| Total debt (including operating lease liability) | 58,396) | 59,935) | 54,013) | 55,140) | 66,469) | |
| Total assets | 137,175) | 135,241) | 127,243) | 132,001) | 155,971) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.43 | 0.44 | 0.42 | 0.42 | 0.43 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.07 | 0.06 | 0.07 | 0.08 | 0.09 | |
| Adobe Inc. | 0.20 | 0.14 | 0.17 | 0.17 | 0.19 | |
| Cadence Design Systems Inc. | 0.29 | 0.14 | 0.18 | 0.11 | 0.13 | |
| CrowdStrike Holdings Inc. | 0.12 | 0.16 | 0.21 | 0.29 | 0.00 | |
| Fair Isaac Corp. | 1.31 | 1.21 | 1.33 | 0.85 | 0.58 | |
| Intuit Inc. | 0.20 | 0.24 | 0.27 | 0.16 | 0.33 | |
| Microsoft Corp. | 0.19 | 0.19 | 0.21 | 0.25 | 0.27 | |
| Oracle Corp. | 0.67 | 0.71 | 0.73 | 0.66 | 0.64 | |
| Palantir Technologies Inc. | 0.04 | 0.05 | 0.07 | 0.08 | 0.17 | |
| Palo Alto Networks Inc. | 0.07 | 0.16 | 0.33 | 0.35 | 0.38 | |
| Salesforce Inc. | 0.14 | 0.15 | 0.15 | 0.10 | 0.11 | |
| ServiceNow Inc. | 0.11 | 0.13 | 0.17 | 0.21 | 0.24 | |
| Synopsys Inc. | 0.05 | 0.07 | 0.07 | 0.08 | 0.08 | |
| Workday Inc. | 0.20 | 0.24 | 0.20 | 0.26 | 0.23 | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.27 | 0.29 | 0.30 | 0.32 | 0.34 | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.27 | 0.28 | 0.29 | 0.31 | 0.33 | |
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
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 58,396 ÷ 137,175 = 0.43
2 Click competitor name to see calculations.
The financial data reveals several trends over the five-year period from 2020 to 2024. Total debt, including operating lease liabilities, initially decreases from 66,469 million US dollars in 2020 to a low of 54,013 million in 2022. However, it then rises again to 59,935 million in 2023 before slightly declining to 58,396 million in 2024. This pattern indicates a reduction in borrowing or lease obligations early in the period, followed by an increase and subsequent modest decrease in the most recent years.
Total assets show a consistent declining trend from 155,971 million US dollars in 2020 to 127,243 million in 2022. After this low point, assets increase again to 135,241 million in 2023 and continue to rise to 137,175 million in 2024. Despite the recent recovery, the asset base remains below the 2020 level, indicating some contraction followed by stabilization and modest growth.
The debt to assets ratio, which measures financial leverage, remains relatively stable throughout the period, ranging narrowly between 0.42 and 0.44. This consistency suggests that changes in debt levels are proportionate to changes in assets, maintaining a balanced leverage position despite fluctuations in both components.
- Total Debt Trend
- Declined from 2020 to 2022, increased in 2023, then slightly decreased in 2024.
- Total Assets Trend
- Decreased steadily until 2022, followed by gradual recovery in 2023 and 2024.
- Debt to Assets Ratio
- Stable around 0.42 to 0.44, indicating consistent financial leverage.
Overall, the data suggests a period of asset contraction and debt reduction early on, transitioning to a phase of asset growth accompanied by a moderate increase in debt. The stable leverage ratio indicates maintained risk exposure in relation to asset size, reflecting a controlled approach to balance sheet management over the observed timeframe.
Financial Leverage
International Business Machines Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 137,175) | 135,241) | 127,243) | 132,001) | 155,971) | |
| Total IBM stockholders’ equity | 27,307) | 22,533) | 21,944) | 18,901) | 20,597) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 5.02 | 6.00 | 5.80 | 6.98 | 7.57 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Accenture PLC | 1.98 | 1.99 | 2.14 | 2.21 | 2.18 | |
| Adobe Inc. | 2.14 | 1.80 | 1.93 | 1.84 | 1.83 | |
| Cadence Design Systems Inc. | 1.92 | 1.67 | 1.87 | 1.60 | 1.58 | |
| CrowdStrike Holdings Inc. | 2.88 | 3.43 | 3.53 | 3.14 | 1.89 | |
| Fair Isaac Corp. | — | — | — | — | 4.85 | |
| Intuit Inc. | 1.74 | 1.61 | 1.69 | 1.57 | 2.14 | |
| Microsoft Corp. | 1.91 | 2.00 | 2.19 | 2.35 | 2.55 | |
| Oracle Corp. | 16.20 | 125.24 | — | 25.03 | 9.56 | |
| Palantir Technologies Inc. | 1.27 | 1.30 | 1.35 | 1.42 | 1.77 | |
| Palo Alto Networks Inc. | 3.87 | 8.29 | 58.35 | 16.14 | 8.23 | |
| Salesforce Inc. | 1.67 | 1.69 | 1.64 | 1.60 | 1.63 | |
| ServiceNow Inc. | 2.12 | 2.28 | 2.64 | 2.92 | 3.07 | |
| Synopsys Inc. | 1.45 | 1.68 | 1.71 | 1.65 | 1.64 | |
| Workday Inc. | 2.04 | 2.41 | 2.31 | 2.66 | 2.74 | |
| Financial Leverage, Sector | ||||||
| Software & Services | 2.36 | 2.55 | 2.73 | 2.96 | 3.14 | |
| Financial Leverage, Industry | ||||||
| Information Technology | 2.46 | 2.56 | 2.69 | 2.90 | 3.12 | |
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
Financial leverage = Total assets ÷ Total IBM stockholders’ equity
= 137,175 ÷ 27,307 = 5.02
2 Click competitor name to see calculations.
- Total assets
- The total assets exhibited a declining trend from 2020 to 2022, decreasing from $155,971 million to $127,243 million. However, this downward movement reversed starting in 2023, with assets increasing to $135,241 million, followed by a further rise to $137,175 million in 2024. Overall, the asset base contracted in the early years but demonstrated recovery in the later periods.
- Total IBM stockholders’ equity
- The stockholders' equity showed fluctuations within the analyzed timeframe. It decreased from $20,597 million in 2020 to $18,901 million in 2021, indicating a reduction in equity. Subsequently, equity increased steadily over the next three years, reaching $21,944 million in 2022 and continuing to $22,533 million in 2023, culminating in a significant increase to $27,307 million in 2024. This growth in equity suggests improved retained earnings or capital infusions during the later years.
- Financial leverage
- Financial leverage, defined as the ratio of assets to equity, steadily declined over the five-year period. Starting at a high of 7.57 in 2020, it decreased to 6.98 in 2021 and further dropped to 5.80 in 2022. The ratio showed minor variation in 2023 at 6.00 before declining again to 5.02 in 2024. This trend indicates a reduction in reliance on debt financing relative to equity, suggesting a strengthening of the company's capital structure and potentially lower financial risk.
Interest Coverage
International Business Machines Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to IBM | 6,023) | 7,502) | 1,639) | 5,743) | 5,590) | |
| Add: Net income attributable to noncontrolling interest | 17) | 16) | 20) | 19) | 22) | |
| Less: Income (loss) from discontinued operations, net of tax | 8) | (12) | (143) | 1,031) | 89) | |
| Add: Income tax expense | (218) | 1,176) | (626) | 125) | (864) | |
| Add: Interest expense | 1,712) | 1,607) | 1,216) | 1,155) | 1,288) | |
| Earnings before interest and tax (EBIT) | 7,526) | 10,313) | 2,392) | 6,011) | 5,947) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 4.40 | 6.42 | 1.97 | 5.20 | 4.62 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Accenture PLC | 165.48 | 193.31 | 195.34 | 131.46 | 205.84 | |
| Adobe Inc. | 42.01 | 61.17 | 54.64 | 51.49 | 37.00 | |
| Cadence Design Systems Inc. | 19.37 | 36.43 | 46.58 | 46.26 | 31.50 | |
| CrowdStrike Holdings Inc. | 5.77 | -5.31 | -5.34 | -55.36 | -315.25 | |
| Fair Isaac Corp. | 7.08 | 6.79 | 7.83 | 12.80 | 7.09 | |
| Intuit Inc. | 15.67 | 13.05 | 32.38 | 89.14 | 158.00 | |
| Microsoft Corp. | 37.72 | 46.38 | 41.58 | 31.31 | 21.47 | |
| Oracle Corp. | 4.39 | 3.65 | 3.84 | 6.28 | 7.13 | |
| Palantir Technologies Inc. | — | 69.33 | -87.97 | -133.20 | -82.39 | |
| Palo Alto Networks Inc. | 120.07 | 21.82 | -6.56 | -1.85 | -1.61 | |
| Salesforce Inc. | 18.49 | 3.20 | 7.93 | 21.49 | 6.43 | |
| ServiceNow Inc. | 76.57 | 43.00 | 15.78 | 9.89 | 5.56 | |
| Synopsys Inc. | 44.06 | 1,106.08 | 657.96 | 240.38 | 125.16 | |
| Workday Inc. | 4.12 | -1.54 | 1.97 | -3.00 | -7.22 | |
| Interest Coverage, Sector | ||||||
| Software & Services | 17.98 | 17.22 | 18.09 | 17.35 | 13.97 | |
| Interest Coverage, Industry | ||||||
| Information Technology | 19.55 | 17.69 | 22.65 | 19.92 | 14.14 | |
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
Interest coverage = EBIT ÷ Interest expense
= 7,526 ÷ 1,712 = 4.40
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in earnings before interest and tax (EBIT) over the five-year period. EBIT experienced a moderate increase from 5,947 million USD in 2020 to 6,011 million USD in 2021, followed by a sharp decline to 2,392 million USD in 2022. Subsequently, there was a substantial recovery to 10,313 million USD in 2023 before EBIT decreased again to 7,526 million USD in 2024. This pattern indicates considerable volatility in operating profitability during the period.
Interest expense displayed a relatively stable yet gradually increasing trend. Starting at 1,288 million USD in 2020, it decreased slightly to 1,155 million USD in 2021, then rose marginally to 1,216 million USD in 2022. From there, the expense increased more markedly to 1,607 million USD in 2023 and further to 1,712 million USD in 2024. This suggests a rising cost of debt or increased borrowing over the latter years.
The interest coverage ratio, which measures the company’s ability to meet interest obligations from operating earnings, varied in accordance with changes in EBIT and interest expense. It improved from 4.62 in 2020 to 5.2 in 2021, reflecting stronger earnings relative to interest costs. However, coverage deteriorated steeply to 1.97 in 2022, coinciding with the EBIT drop, signaling a tighter ability to cover interest expenses. The ratio then recovered significantly to 6.42 in 2023, consistent with the EBIT rebound, before declining again to 4.4 in 2024.
Overall, the data illustrates fluctuating operational performance marked by a substantial dip in 2022 and a recovery in 2023. Meanwhile, interest expenses have shown a gradual increase, impacting the interest coverage ratio and indicating a heightened risk exposure related to debt servicing in certain years. The pattern underscores the importance of monitoring operational efficiency alongside financing costs to maintain financial stability.
Fixed Charge Coverage
International Business Machines Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to IBM | 6,023) | 7,502) | 1,639) | 5,743) | 5,590) | |
| Add: Net income attributable to noncontrolling interest | 17) | 16) | 20) | 19) | 22) | |
| Less: Income (loss) from discontinued operations, net of tax | 8) | (12) | (143) | 1,031) | 89) | |
| Add: Income tax expense | (218) | 1,176) | (626) | 125) | (864) | |
| Add: Interest expense | 1,712) | 1,607) | 1,216) | 1,155) | 1,288) | |
| Earnings before interest and tax (EBIT) | 7,526) | 10,313) | 2,392) | 6,011) | 5,947) | |
| Add: Operating lease cost | 1,018) | 1,013) | 1,050) | 1,126) | 1,581) | |
| Earnings before fixed charges and tax | 8,544) | 11,326) | 3,442) | 7,137) | 7,528) | |
| Interest expense | 1,712) | 1,607) | 1,216) | 1,155) | 1,288) | |
| Operating lease cost | 1,018) | 1,013) | 1,050) | 1,126) | 1,581) | |
| Fixed charges | 2,730) | 2,620) | 2,266) | 2,281) | 2,869) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 3.13 | 4.32 | 1.52 | 3.13 | 2.62 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Accenture PLC | 13.46 | 10.98 | 12.25 | 10.41 | 9.66 | |
| Adobe Inc. | 26.20 | 30.56 | 26.79 | 25.59 | 18.77 | |
| Cadence Design Systems Inc. | 11.13 | 14.79 | 15.50 | 13.77 | 11.46 | |
| CrowdStrike Holdings Inc. | 3.98 | -3.39 | -3.39 | -6.40 | -12.01 | |
| Fair Isaac Corp. | 6.35 | 5.94 | 6.39 | 8.93 | 4.91 | |
| Intuit Inc. | 11.14 | 9.03 | 14.67 | 25.58 | 27.48 | |
| Microsoft Corp. | 17.61 | 19.44 | 19.50 | 16.90 | 12.44 | |
| Oracle Corp. | 3.55 | 3.12 | 3.22 | 5.17 | 5.68 | |
| Palantir Technologies Inc. | 9.48 | 4.62 | -5.06 | -7.89 | -16.41 | |
| Palo Alto Networks Inc. | 12.78 | 7.20 | -1.18 | -1.09 | -0.52 | |
| Salesforce Inc. | 4.74 | 1.51 | 2.18 | 2.92 | 1.68 | |
| ServiceNow Inc. | 12.36 | 7.59 | 3.87 | 2.95 | 2.29 | |
| Synopsys Inc. | 12.88 | 14.38 | 12.91 | 9.29 | 7.46 | |
| Workday Inc. | 2.60 | -0.29 | 1.15 | -0.69 | -2.35 | |
| Fixed Charge Coverage, Sector | ||||||
| Software & Services | 9.99 | 9.48 | 9.44 | 9.23 | 7.43 | |
| Fixed Charge Coverage, Industry | ||||||
| Information Technology | 12.44 | 11.34 | 13.44 | 12.21 | 9.04 | |
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
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 8,544 ÷ 2,730 = 3.13
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings show considerable variability over the five-year period. Beginning at 7,528 million US dollars in 2020, there was a slight decline to 7,137 million in 2021, followed by a significant drop to 3,442 million in 2022. However, this was succeeded by a strong recovery in 2023, reaching 11,326 million, before decreasing again to 8,544 million in 2024. The data indicates volatility, with a notable rebound in 2023 after a substantial dip in 2022.
- Fixed charges
- The fixed charges generally decreased from 2,869 million US dollars in 2020 to 2,281 million in 2021 and remained relatively stable in 2022 at 2,266 million. This was followed by an increase to 2,620 million in 2023 and a slight further increase to 2,730 million in 2024. The trend suggests an initial reduction in fixed charges which then reversed, showing a gradual increase in the later years.
- Fixed charge coverage ratio
- The fixed charge coverage ratio exhibited fluctuations consistent with the changes in earnings and fixed charges. Starting at 2.62 in 2020, the ratio improved to 3.13 in 2021, indicating stronger coverage of fixed charges by earnings. The ratio then fell sharply to 1.52 in 2022, reflecting the significant drop in earnings during that year. A strong improvement occurred in 2023 with the ratio rising to 4.32, the highest in the period, before settling at 3.13 in 2024. Overall, coverage shows sensitivity to earnings volatility, with 2023 representing a peak in financial resilience before normalizing in 2024.