Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

International Business Machines Corp. (NYSE:IBM)

Analysis of Profitability Ratios

Beginner level

Profitability Ratios (Summary)

International Business Machines Corp., profitability ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Return on Sales
Gross profit margin 48.32% 47.30% 46.41% 45.78% 47.92%
Operating profit margin 9.22% 13.67% 16.61% 14.91% 16.40%
Net profit margin 7.59% 12.22% 10.97% 7.27% 14.86%
Return on Investment
Return on equity (ROE) 27.14% 45.25% 51.96% 32.70% 65.07%
Return on assets (ROA) 3.58% 6.20% 7.07% 4.59% 10.11%

Based on: 10-K (filing date: 2021-02-23), 10-K (filing date: 2020-02-25), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28).

Profitability ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. International Business Machines Corp.’s gross profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. International Business Machines Corp.’s operating profit margin ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. International Business Machines Corp.’s net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Profitability ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders’ equity. International Business Machines Corp.’s ROE deteriorated from 2018 to 2019 and from 2019 to 2020.
ROA A profitability ratio calculated as net income divided by total assets. International Business Machines Corp.’s ROA deteriorated from 2018 to 2019 and from 2019 to 2020.

Gross Profit Margin

International Business Machines Corp., gross profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Gross profit 35,575  36,488  36,936  36,227  38,294 
Revenue 73,620  77,147  79,591  79,139  79,919 
Profitability Ratio
Gross profit margin1 48.32% 47.30% 46.41% 45.78% 47.92%
Benchmarks
Gross Profit Margin, Competitors2
Adobe Inc. 86.62% 85.03% 86.77% 86.16% 86.00%
Alphabet Inc. 53.58% 55.58% 56.48% 58.88% 61.08%
Autodesk Inc. 90.08% 88.87% 85.25% 83.17% 85.20%
Facebook Inc. 80.58% 81.94% 83.25% 86.58% 86.29%
Intuit Inc. 82.05% 82.80% 83.62% 84.37% 83.98%
Microsoft Corp. 67.78% 65.90% 65.25% 61.91% 61.58%
Oracle Corp. 79.68% 79.76% 79.71% 80.20% 79.81%
salesforce.com inc. 75.23% 74.02% 73.54% 73.38% 75.18%
ServiceNow Inc. 78.16% 76.98% 76.13% 74.15% 71.33%

Based on: 10-K (filing date: 2021-02-23), 10-K (filing date: 2020-02-25), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28).

1 2020 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 35,575 ÷ 73,620 = 48.32%

2 Click competitor name to see calculations.

Profitability ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. International Business Machines Corp.’s gross profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.

Operating Profit Margin

International Business Machines Corp., operating profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Operating income 6,786  10,543  13,217  11,799  13,105 
Revenue 73,620  77,147  79,591  79,139  79,919 
Profitability Ratio
Operating profit margin1 9.22% 13.67% 16.61% 14.91% 16.40%
Benchmarks
Operating Profit Margin, Competitors2
Adobe Inc. 32.93% 29.25% 31.45% 29.69% 25.51%
Alphabet Inc. 22.59% 21.15% 19.24% 23.59% 26.27%
Autodesk Inc. 10.48% -0.97% -24.75% -24.60% 0.05%
Facebook Inc. 38.01% 33.93% 44.62% 49.70% 44.96%
Intuit Inc. 28.34% 27.33% 25.10% 26.95% 26.46%
Microsoft Corp. 37.03% 34.14% 31.77% 24.82% 23.65%
Oracle Corp. 35.57% 34.26% 34.34% 33.69% 34.02%
salesforce.com inc. 1.74% 4.03% 2.25% 0.77% 1.72%
ServiceNow Inc. 4.40% 1.22% -1.63% -5.25% -30.41%
Operating Profit Margin, Sector
Software & Computer Services 27.17% 25.56% 25.90% 25.11% 24.75%
Operating Profit Margin, Industry
Technology 26.20% 25.96% 27.06% 25.45% 24.51%

Based on: 10-K (filing date: 2021-02-23), 10-K (filing date: 2020-02-25), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28).

1 2020 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × 6,786 ÷ 73,620 = 9.22%

2 Click competitor name to see calculations.

Profitability ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. International Business Machines Corp.’s operating profit margin ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Net Profit Margin

International Business Machines Corp., net profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net income attributable to IBM 5,590  9,431  8,728  5,753  11,872 
Revenue 73,620  77,147  79,591  79,139  79,919 
Profitability Ratio
Net profit margin1 7.59% 12.22% 10.97% 7.27% 14.86%
Benchmarks
Net Profit Margin, Competitors2
Adobe Inc. 40.88% 26.42% 28.69% 23.20% 19.96%
Alphabet Inc. 22.06% 21.22% 22.46% 11.42% 21.58%
Autodesk Inc. 6.55% -3.14% -27.56% -28.66% -13.20%
Facebook Inc. 33.90% 26.15% 39.60% 39.20% 36.97%
Intuit Inc. 23.78% 22.95% 20.31% 18.76% 20.86%
Microsoft Corp. 30.96% 31.18% 15.02% 23.57% 19.69%
Oracle Corp. 25.94% 28.05% 9.60% 24.74% 24.03%
salesforce.com inc. 0.74% 8.36% 1.22% 2.14% -0.71%
ServiceNow Inc. 2.62% 18.11% -1.02% -7.71% -32.49%
Net Profit Margin, Sector
Software & Computer Services 24.04% 23.18% 18.85% 17.49% 20.09%
Net Profit Margin, Industry
Technology 23.04% 22.90% 20.81% 18.50% 19.30%

Based on: 10-K (filing date: 2021-02-23), 10-K (filing date: 2020-02-25), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28).

1 2020 Calculation
Net profit margin = 100 × Net income attributable to IBM ÷ Revenue
= 100 × 5,590 ÷ 73,620 = 7.59%

2 Click competitor name to see calculations.

Profitability ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. International Business Machines Corp.’s net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Return on Equity (ROE)

International Business Machines Corp., ROE calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net income attributable to IBM 5,590  9,431  8,728  5,753  11,872 
Total IBM stockholders’ equity 20,597  20,841  16,796  17,594  18,246 
Profitability Ratio
ROE1 27.14% 45.25% 51.96% 32.70% 65.07%
Benchmarks
ROE, Competitors2
Adobe Inc. 39.66% 28.03% 27.67% 20.02% 15.74%
Alphabet Inc. 18.09% 17.05% 17.30% 8.30% 14.01%
Autodesk Inc. -79.35% -20.41%
Facebook Inc. 22.72% 18.29% 26.28% 21.43% 17.26%
Intuit Inc. 35.76% 41.53% 51.44% 71.71% 84.32%
Microsoft Corp. 37.43% 38.35% 20.03% 29.29% 23.33%
Oracle Corp. 83.94% 50.87% 8.37% 17.33% 18.82%
salesforce.com inc. 0.37% 7.11% 1.36% 2.40% -0.95%
ServiceNow Inc. 4.18% 29.45% -2.40% -25.53% -116.76%
ROE, Sector
Software & Computer Services 24.60% 24.78% 19.89% 17.21% 19.52%
ROE, Industry
Technology 29.52% 29.77% 26.95% 20.11% 20.72%

Based on: 10-K (filing date: 2021-02-23), 10-K (filing date: 2020-02-25), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28).

1 2020 Calculation
ROE = 100 × Net income attributable to IBM ÷ Total IBM stockholders’ equity
= 100 × 5,590 ÷ 20,597 = 27.14%

2 Click competitor name to see calculations.

Profitability ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders’ equity. International Business Machines Corp.’s ROE deteriorated from 2018 to 2019 and from 2019 to 2020.

Return on Assets (ROA)

International Business Machines Corp., ROA calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net income attributable to IBM 5,590  9,431  8,728  5,753  11,872 
Total assets 155,971  152,186  123,382  125,356  117,470 
Profitability Ratio
ROA1 3.58% 6.20% 7.07% 4.59% 10.11%
Benchmarks
ROA, Competitors2
Adobe Inc. 21.66% 14.22% 13.80% 11.65% 9.20%
Alphabet Inc. 12.60% 12.45% 13.20% 6.42% 11.63%
Autodesk Inc. 3.47% -1.71% -13.78% -12.13% -5.99%
Facebook Inc. 18.29% 13.86% 22.72% 18.85% 15.73%
Intuit Inc. 16.70% 24.78% 23.39% 23.87% 23.04%
Microsoft Corp. 14.70% 13.69% 6.40% 8.80% 8.67%
Oracle Corp. 8.78% 10.20% 2.79% 6.92% 7.93%
salesforce.com inc. 0.23% 3.61% 0.61% 1.02% -0.37%
ServiceNow Inc. 1.36% 10.41% -0.69% -4.39% -22.22%
ROA, Sector
Software & Computer Services 11.84% 11.58% 9.45% 8.10% 9.90%
ROA, Industry
Technology 12.78% 12.84% 11.88% 9.15% 10.14%

Based on: 10-K (filing date: 2021-02-23), 10-K (filing date: 2020-02-25), 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28).

1 2020 Calculation
ROA = 100 × Net income attributable to IBM ÷ Total assets
= 100 × 5,590 ÷ 155,971 = 3.58%

2 Click competitor name to see calculations.

Profitability ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. International Business Machines Corp.’s ROA deteriorated from 2018 to 2019 and from 2019 to 2020.