The review of Net Profit Margin witnessed a fluctuating trend. The Net Profit Margin declined from 16.34% in 2019 to 12.13% in 2023.
The average EBIT Margin for the period under analysis was 12.26%, with 2022 and 2019 performing the worst and best, respectively.
In the current year, IBM was able to cover its interest liabilities 6.40 times in the current year- compared to 2019 when it was 8.06 times.
The Asset turnover stood at 0.47 times in 2023 from 0.39 in 2019, implying a low performance on Assets of the business in relation to revenue.
Profitability
The revenue of IBM has fluctuated year on year. The revenue decreased by 4.39% between 2019 and 2020 and a further 5.54% increase was recorded between 2021 and 2022. There also occurred an increase of 2.20% between 2022 and 2023 (the current period).
IBM’s performance in profitability looks good as the return on capital employed also recorded good performance during the period of analysis.
Liquidity
The company’s result in liquidity looks poor, as current ratio/acid test decreased from 1.02:1/0.98:1 to 0.96:1/0.96:1 on the last year. Which implies that the company does not have enough assets to settle its current liabilities.
Capital Structure
IBM is both equity and debt financed.
The debt-to-equity (D/E) ratio has been falling year on year. The gearing position of the company appears to be high as it stood at 2.66 in the current year.
