Stock Analysis on Net

International Business Machines Corp. (NYSE:IBM)

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Analysis of Long-term (Investment) Activity Ratios

Microsoft Excel

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Long-term Activity Ratios (Summary)

International Business Machines Corp., long-term (investment) activity ratios

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net fixed asset turnover
Net fixed asset turnover (including operating lease, right-of-use asset)
Total asset turnover
Equity turnover

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).


The analysis of the financial ratios over the five-year period reveals notable trends in asset utilization and equity turnover.

Net Fixed Asset Turnover
This ratio showed a marked increase from 7.33 in 2020 to a peak of 11.35 in 2022, indicating improved efficiency in using fixed assets to generate sales. However, it slightly declined to 11.25 in 2023 and further to 10.95 in 2024, suggesting a minor reduction in asset efficiency after reaching the highest point.
Net Fixed Asset Turnover Including Operating Lease, Right-of-Use Asset
The turnover ratio rose steadily from 5.00 in 2020 to 7.37 in 2022, reflecting enhanced utilization of assets when considering leased assets. Similar to the net fixed asset turnover, a slight decrease to 7.09 in 2023 and 7.03 in 2024 indicates a plateau and a marginal dip in asset productivity in more recent years.
Total Asset Turnover
The total asset turnover ratio remained relatively stable throughout the period, fluctuating narrowly between 0.43 and 0.48. This suggests consistent efficiency in utilizing the overall asset base to generate revenue, with no significant improvements or declines.
Equity Turnover
The equity turnover ratio displayed a declining trend, moving from 3.57 in 2020 down to 2.30 in 2024. This decreasing pattern points to the company generating less revenue per unit of equity over time, potentially indicating changes in capital structure, revenue generation, or equity base size.

In summary, the company experienced increased efficiency in fixed asset utilization up to 2022 followed by slight declines, while overall asset turnover remained steady. The downward trend in equity turnover may warrant attention to assess equity management effectiveness or operational factors affecting revenue relative to equity.


Net Fixed Asset Turnover

International Business Machines Corp., net fixed asset turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Revenue
Property, plant and equipment, net
Long-term Activity Ratio
Net fixed asset turnover1
Benchmarks
Net Fixed Asset Turnover, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Fair Isaac Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Net Fixed Asset Turnover, Sector
Software & Services
Net Fixed Asset Turnover, Industry
Information Technology

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
Net fixed asset turnover = Revenue ÷ Property, plant and equipment, net
= ÷ =

2 Click competitor name to see calculations.


Revenue Trend
Revenue experienced a significant decline from 73,620 million US dollars in 2020 to 57,350 million in 2021. However, from 2021 onward, revenue demonstrated a recovery trend, gradually increasing each year to reach 62,753 million by 2024. Despite this recovery, the revenue in 2024 remained below the 2020 level, indicating partial but not full restoration.
Property, Plant and Equipment, Net
The net value of property, plant, and equipment showed a consistent decrease from 10,040 million US dollars in 2020 to 5,694 million in 2021. Following this sharp decline, the asset base slightly contracted further in 2022 to 5,334 million but then started to increase slowly to 5,731 million by 2024. The overall trend indicates an initial reduction in fixed assets, followed by stabilization and moderate growth.
Net Fixed Asset Turnover Ratio
The net fixed asset turnover ratio significantly improved from 7.33 in 2020 to a peak of 11.35 in 2022, reflecting enhanced efficiency in utilizing fixed assets to generate revenue. After reaching this peak, the ratio experienced a slight decline but remained elevated at 10.95 in 2024, suggesting sustained improved efficiency compared to the base year 2020.
Summary of Insights
The data suggests that there was a notable reduction in fixed assets in 2021, possibly reflecting asset disposals or impairments, coinciding with the sharp revenue drop in the same year. Despite the reduced asset base, operational efficiency improved as evidenced by the rising net fixed asset turnover ratio, indicating better utilization of assets to generate revenue. The subsequent gradual recovery in revenue and fixed assets indicates a period of rebuilding or investment, while maintaining relatively high efficiency. These patterns suggest a strategic adjustment phase followed by stabilization and incremental growth.

Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)

International Business Machines Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Revenue
 
Property, plant and equipment, net
Operating right-of-use assets, net
Property, plant and equipment, net (including operating lease, right-of-use asset)
Long-term Activity Ratio
Net fixed asset turnover (including operating lease, right-of-use asset)1
Benchmarks
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Fair Isaac Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector
Software & Services
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry
Information Technology

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
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenue ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= ÷ =

2 Click competitor name to see calculations.


Revenue
The revenue exhibits a noticeable decline from 73,620 million US dollars in 2020 to 57,350 million in 2021, representing a significant drop. Following this decrease, revenue shows a gradual recovery trend, increasing to 60,530 million in 2022, then to 61,860 million in 2023, and slightly to 62,753 million in 2024. Despite this upward movement after 2021, revenue remains below the 2020 level throughout the observed period.
Property, Plant and Equipment, Net (including operating lease, right-of-use asset)
This asset category declines sharply from 14,726 million US dollars at the end of 2020 to 8,916 million in 2021, suggesting a significant reduction in fixed assets or lease-related assets during this period. A further decrease to 8,212 million is observed in 2022. However, from 2022 onwards, the balance stabilizes and slightly increases, reaching 8,721 million in 2023 and 8,928 million in 2024, indicating some reinvestment or recovery in asset levels.
Net Fixed Asset Turnover (including operating lease, right-of-use asset)
The net fixed asset turnover ratio shows a continuous improvement from 5.00 in 2020 to 6.43 in 2021, indicating higher efficiency in generating revenue from net fixed assets despite the asset reduction. This upward trend continues, peaking at 7.37 in 2022. Subsequently, the ratio slightly declines but remains above earlier levels, with values of 7.09 in 2023 and 7.03 in 2024. This pattern suggests that the company is improving its asset utilization over the long term, maintaining relatively high turnover even as revenues recover.

Total Asset Turnover

International Business Machines Corp., total asset turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Revenue
Total assets
Long-term Activity Ratio
Total asset turnover1
Benchmarks
Total Asset Turnover, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Fair Isaac Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Total Asset Turnover, Sector
Software & Services
Total Asset Turnover, Industry
Information Technology

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
Total asset turnover = Revenue ÷ Total assets
= ÷ =

2 Click competitor name to see calculations.


Revenue
Revenue showed a significant decline from 2020 to 2021, dropping from 73,620 million US dollars to 57,350 million US dollars. Following this decrease, revenue demonstrated a gradual recovery over the subsequent years, rising to 60,530 million in 2022, then to 61,860 million in 2023, and further to 62,753 million by the end of 2024. Despite this upward trend post-2021, revenue levels in 2024 remained below those observed in 2020.
Total Assets
Total assets exhibited a declining trend from 155,971 million US dollars at the end of 2020 to 127,243 million at the end of 2022. This decline was followed by a moderate increase in assets over the last two years, reaching 135,241 million in 2023 and 137,175 million in 2024. Overall, total assets at the end of 2024 were still lower compared to the 2020 level, suggesting a contraction in the asset base but with signs of stabilization or modest growth after 2022.
Total Asset Turnover
The total asset turnover ratio fluctuated modestly throughout the period. Starting at 0.47 in 2020, it decreased to 0.43 in 2021, coinciding with the drop in revenue and assets. The ratio then increased to 0.48 in 2022, indicating improved efficiency in generating revenue relative to assets. In the last two years, 2023 and 2024, the ratio stabilized at 0.46. This suggests that while asset utilization experienced some improvement following the initial downturn, the efficiency remained relatively steady but below the 2022 peak.
Summary
The data indicates that the entity experienced a notable downturn in revenue and total assets in 2021 and 2022, likely reflecting challenging operational or market conditions during that period. Subsequently, both revenue and assets showed signs of recovery starting in 2023, although levels had not yet returned to those of 2020. The total asset turnover ratio reflected this dynamic, with efficiency declining initially but then improving and stabilizing. These trends highlight a phase of contraction followed by gradual recovery, with cautious improvement in asset utilization efficiency.

Equity Turnover

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

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Revenue
Total IBM stockholders’ equity
Long-term Activity Ratio
Equity turnover1
Benchmarks
Equity Turnover, Competitors2
Accenture PLC
Adobe Inc.
Cadence Design Systems Inc.
CrowdStrike Holdings Inc.
Fair Isaac Corp.
Intuit Inc.
Microsoft Corp.
Oracle Corp.
Palantir Technologies Inc.
Palo Alto Networks Inc.
Salesforce Inc.
ServiceNow Inc.
Synopsys Inc.
Workday Inc.
Equity Turnover, Sector
Software & Services
Equity Turnover, Industry
Information Technology

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
Equity turnover = Revenue ÷ Total IBM stockholders’ equity
= ÷ =

2 Click competitor name to see calculations.


The financial data indicates several notable trends over the five-year period examined.

Revenue
The revenue experienced a significant decline from 2020 to 2021, dropping from approximately $73.6 billion to $57.35 billion. Subsequently, there was a recovery phase characterized by gradual increases in revenue over the next three years, reaching about $62.75 billion in 2024. Overall, the revenue shows a U-shaped trajectory, with a steep initial decline followed by modest but steady growth.
Total Stockholders’ Equity
The total stockholders' equity displays a fluctuating but generally upward trend. After decreasing from approximately $20.6 billion in 2020 to $18.9 billion in 2021, equity rebounded strongly to $21.9 billion in 2022 and continued to grow to $27.3 billion by 2024. This suggests increasing retained earnings or capital infusion overshadowing the initial decline.
Equity Turnover
The equity turnover ratio has shown a consistent decline throughout the period, starting at 3.57 in 2020 and weakening to 2.3 by 2024. This trend indicates a reduction in the efficiency with which the company is generating revenue relative to its equity base.

In summary, the data reveals an initial setback in revenue and equity in 2021, followed by recovery and growth in shareholder equity alongside revenue stabilization. However, the company's ability to generate revenue from its equity is diminishing, as evidenced by the declining equity turnover ratio. This implies that while the equity base is strengthening, the company’s effectiveness in using this capital to drive sales is decreasing over time.