Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Long-term Activity Ratios (Summary)
International Business Machines Corp., long-term (investment) activity ratios
| 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
| 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. | ||||||
| Datadog 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
| 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. | ||||||
| Datadog 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
| 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. | ||||||
| Datadog 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
| 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. | ||||||
| Datadog 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.