IBM

Key Performance Metrics

  • The review of Net Profit Margin witnessed a surging trend. The Net Profit Margin improved from 7.27% in 2017 to 10.01% in 2021.
  • The average EBIT Margin for the period under analysis was 12.54%, with 2020 and 2017 performing the worst and best, respectively.
  • In the current year, IBM was able to cover its interest liabilities 5.19 times in the current year- compared to 2017 when it was 19.54 times.
  • The Asset turnover stood at 0.43 times in 2021 from 0.63 in 2017, implying a low performance on Assets of the business in relation to revenue.

Profitability

  • The revenue of IBM has flunctuated year on year. The revenue increased by 0.5% between 2017 and 2018 and a further 3.0% decrease was recorded between 2018 and 2019. There also occurred an increase of 3.9% between 2020 and 2021 (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 0.98:1/0.94:1 to 0.88:1/0.83:1 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 5.95 in the current year.

Source: IBM Annual Report

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