Microsoft Excel LibreOffice Calc

International Business Machines Corp. (IBM)


Short-term (Operating) Activity Analysis

Difficulty: Beginner


Ratios (Summary)

International Business Machines Corp., short-term (operating) activity ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Turnover Ratios
Inventory turnover 25.36 27.11 26.80 26.47 22.06
Receivables turnover 10.71 8.86 8.70 9.81 10.21
Payables turnover 6.50 6.65 6.70 6.81 6.76
Working capital turnover 7.29 6.40 10.50 9.93 9.45
Average No. of Days
Average inventory processing period 14 13 14 14 17
Add: Average receivable collection period 34 41 42 37 36
Operating cycle 48 54 56 51 53
Less: Average payables payment period 56 55 54 54 54
Cash conversion cycle -8 -1 2 -3 -1

Based on: 10-K (filing date: 2019-02-26), 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).

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. International Business Machines Corp.’s inventory turnover improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.
Receivables turnover An activity ratio equal to revenue divided by receivables. International Business Machines Corp.’s receivables turnover improved from 2016 to 2017 and from 2017 to 2018.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. International Business Machines Corp.’s payables turnover declined from 2016 to 2017 and from 2017 to 2018.
Working capital turnover An activity ratio calculated as revenue divided by working capital. International Business Machines Corp.’s working capital turnover deteriorated from 2016 to 2017 but then slightly improved from 2017 to 2018.

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. International Business Machines Corp.’s average receivable collection period improved from 2016 to 2017 and from 2017 to 2018.
Operating cycle Equal to average inventory processing period plus average receivables collection period. International Business Machines Corp.’s operating cycle improved from 2016 to 2017 and from 2017 to 2018.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. International Business Machines Corp.’s average payables payment period increased from 2016 to 2017 and from 2017 to 2018.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. International Business Machines Corp.’s cash conversion cycle improved from 2016 to 2017 and from 2017 to 2018.

Inventory Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Cost 42,655  42,912  41,625  41,057  46,386 
Inventories 1,682  1,583  1,553  1,551  2,103 
Ratio
Inventory turnover1 25.36 27.11 26.80 26.47 22.06
Benchmarks
Inventory Turnover, Competitors
Alphabet Inc. 53.79 60.86 131.11 57.36
Microsoft Corp. 14.41 15.71 14.56 11.38 10.18
Oracle Corp. 20.30 24.90 35.28 23.99 38.29
Inventory Turnover, Sector
Software & Computer Services 27.86 29.03 28.95 21.95 22.38
Inventory Turnover, Industry
Technology 13.31 12.04 14.74 14.91 14.90

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Inventory turnover = Cost ÷ Inventories
= 42,655 ÷ 1,682 = 25.36

Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. International Business Machines Corp.’s inventory turnover improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Receivables Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Revenue 79,591  79,139  79,919  81,741  92,793 
Notes and accounts receivable, trade, net of allowances 7,432  8,928  9,182  8,333  9,090 
Ratio
Receivables turnover1 10.71 8.86 8.70 9.81 10.21
Benchmarks
Receivables Turnover, Competitors
Adobe Inc. 6.86 5.99 7.03 7.14 7.01
Alphabet Inc. 6.57 6.05 6.39 6.49 7.03
Facebook Inc. 7.36 6.97 6.92 7.01 7.43
Intuit Inc. 60.86 50.26 43.46 46.07 33.63
Microsoft Corp. 4.17 4.54 4.67 5.23 4.44
Oracle Corp. 7.55 7.12 6.88 6.80 6.29
salesforce.com inc. 2.68 2.63 2.67 2.82 2.99
Receivables Turnover, Sector
Software & Computer Services 6.14 6.05 6.20 6.60 6.46
Receivables Turnover, Industry
Technology 7.84 7.98 8.32 8.62 8.02

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Receivables turnover = Revenue ÷ Notes and accounts receivable, trade, net of allowances
= 79,591 ÷ 7,432 = 10.71

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. International Business Machines Corp.’s receivables turnover improved from 2016 to 2017 and from 2017 to 2018.

Payables Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Cost 42,655  42,912  41,625  41,057  46,386 
Accounts payable 6,558  6,451  6,209  6,028  6,864 
Ratio
Payables turnover1 6.50 6.65 6.70 6.81 6.76
Benchmarks
Payables Turnover, Competitors
Adobe Inc. 6.42 8.90 9.31 7.98 9.10
Alphabet Inc. 13.60 14.53 17.22 14.59 14.98
Facebook Inc. 11.41 14.35 12.55 14.63 12.23
Intuit Inc. 5.49 5.15 4.09 3.82 4.15
Microsoft Corp. 4.45 4.64 4.75 5.01 3.64
Oracle Corp. 15.28 12.47 14.84 9.34 15.36
salesforce.com inc. 36.27 19.38 23.15 13.49 14.90
Payables Turnover, Sector
Software & Computer Services 7.63 7.62 7.61 7.24 6.54
Payables Turnover, Industry
Technology 4.48 4.44 5.04 5.44 5.27

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Payables turnover = Cost ÷ Accounts payable
= 42,655 ÷ 6,558 = 6.50

Ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. International Business Machines Corp.’s payables turnover declined from 2016 to 2017 and from 2017 to 2018.

Working Capital Turnover

International Business Machines Corp., working capital turnover calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Current assets 49,146  49,735  43,888  42,504  49,422 
Less: Current liabilities 38,227  37,363  36,275  34,269  39,600 
Working capital 10,919  12,372  7,613  8,235  9,822 
Revenue 79,591  79,139  79,919  81,741  92,793 
Ratio
Working capital turnover1 7.29 6.40 10.50 9.93 9.45
Benchmarks
Working Capital Turnover, Competitors
Adobe Inc. 16.24 1.96 1.93 1.84 1.97
Alphabet Inc. 1.35 1.11 1.02 1.06 1.03
Facebook Inc. 1.28 0.91 0.88 0.91 1.02
Intuit Inc. 20.71 5.14 3.76
Microsoft Corp. 0.99 0.94 1.06 1.25 1.27
Oracle Corp. 0.70 0.75 0.79 0.80 1.13
salesforce.com inc.
Working Capital Turnover, Sector
Software & Computer Services 1.39 1.24 1.32 1.43 1.62
Working Capital Turnover, Industry
Technology 2.36 1.81 2.01 2.33 2.60

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Working capital turnover = Revenue ÷ Working capital
= 79,591 ÷ 10,919 = 7.29

Ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. International Business Machines Corp.’s working capital turnover deteriorated from 2016 to 2017 but then slightly improved from 2017 to 2018.

Average Inventory Processing Period

International Business Machines Corp., average inventory processing period calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Inventory turnover 25.36 27.11 26.80 26.47 22.06
Ratio (no. of days)
Average inventory processing period1 14 13 14 14 17
Benchmarks (no. of days)
Average Inventory Processing Period, Competitors
Alphabet Inc. 7 6 3 6
Microsoft Corp. 25 23 25 32 36
Oracle Corp. 18 15 10 15 10
Average Inventory Processing Period, Sector
Software & Computer Services 13 13 13 17 16
Average Inventory Processing Period, Industry
Technology 27 30 25 24 24

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 25.36 = 14

Ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.

Average Receivable Collection Period

International Business Machines Corp., average receivable collection period calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Receivables turnover 10.71 8.86 8.70 9.81 10.21
Ratio (no. of days)
Average receivable collection period1 34 41 42 37 36
Benchmarks (no. of days)
Average Receivable Collection Period, Competitors
Adobe Inc. 53 61 52 51 52
Alphabet Inc. 56 60 57 56 52
Facebook Inc. 50 52 53 52 49
Intuit Inc. 6 7 8 8 11
Microsoft Corp. 88 80 78 70 82
Oracle Corp. 48 51 53 54 58
salesforce.com inc. 136 139 137 129 122
Average Receivable Collection Period, Sector
Software & Computer Services 59 60 59 55 57
Average Receivable Collection Period, Industry
Technology 47 46 44 42 46

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 10.71 = 34

Ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. International Business Machines Corp.’s average receivable collection period improved from 2016 to 2017 and from 2017 to 2018.

Operating Cycle

International Business Machines Corp., operating cycle calculation, comparison to benchmarks

No. of days

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Average inventory processing period 14 13 14 14 17
Average receivable collection period 34 41 42 37 36
Ratio
Operating cycle1 48 54 56 51 53
Benchmarks
Operating Cycle, Competitors
Alphabet Inc. 63 66 60 62
Microsoft Corp. 113 103 103 102 118
Oracle Corp. 66 66 63 69 68
Operating Cycle, Sector
Software & Computer Services 72 73 72 72 73
Operating Cycle, Industry
Technology 74 76 69 66 70

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 14 + 34 = 48

Ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period. International Business Machines Corp.’s operating cycle improved from 2016 to 2017 and from 2017 to 2018.

Average Payables Payment Period

International Business Machines Corp., average payables payment period calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Payables turnover 6.50 6.65 6.70 6.81 6.76
Ratio (no. of days)
Average payables payment period1 56 55 54 54 54
Benchmarks (no. of days)
Average Payables Payment Period, Competitors
Adobe Inc. 57 41 39 46 40
Alphabet Inc. 27 25 21 25 24
Facebook Inc. 32 25 29 25 30
Intuit Inc. 66 71 89 96 88
Microsoft Corp. 82 79 77 73 100
Oracle Corp. 24 29 25 39 24
salesforce.com inc. 10 19 16 27 24
Average Payables Payment Period, Sector
Software & Computer Services 48 48 48 50 56
Average Payables Payment Period, Industry
Technology 81 82 72 67 69

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 6.50 = 56

Ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. International Business Machines Corp.’s average payables payment period increased from 2016 to 2017 and from 2017 to 2018.

Cash Conversion Cycle

International Business Machines Corp., cash conversion cycle calculation, comparison to benchmarks

No. of days

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Average inventory processing period 14 13 14 14 17
Average receivable collection period 34 41 42 37 36
Average payables payment period 56 55 54 54 54
Ratio
Cash conversion cycle1 -8 -1 2 -3 -1
Benchmarks
Cash Conversion Cycle, Competitors
Alphabet Inc. 36 41 39 37
Microsoft Corp. 31 24 26 29 18
Oracle Corp. 42 37 38 30 44
Cash Conversion Cycle, Sector
Software & Computer Services 24 25 24 22 17
Cash Conversion Cycle, Industry
Technology -7 -6 -3 -1 1

Based on: 10-K (filing date: 2019-02-26), 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).

2018 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 14 + 3456 = -8

Ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. International Business Machines Corp.’s cash conversion cycle improved from 2016 to 2017 and from 2017 to 2018.