IBM Analysis: Financial Ratio Analysis, Strategy, and Recommendations

Running Head: IBM ANALYSIS 0
IBM Analysis

IBM ANALYSIS 1
Table of Contents
Overview....................................................................................................................................2
Strategy......................................................................................................................................2
Financial Ratio Analysis............................................................................................................2
Liquidity Ratios......................................................................................................................3
Efficiency and Management Ratios........................................................................................4
Leverage Ratios......................................................................................................................5
Profitability Ratios..................................................................................................................6
Conclusion..................................................................................................................................8
Recommendation and Assumption............................................................................................9
References................................................................................................................................10
Appendix 1...............................................................................................................................12

IBM ANALYSIS 2
Overview
IBM also known as the International Business Corporation Machine is the American
based company and is currently operating in the 170 countries. The headquarters are situated
in New York. The core business of the company’s manufacturing and marketing of the
hardware, middleware and the software. The company is also engaged in the services of the
hosting and the consulting services and falls in the category of the mainframe computers to
anno technology. IBM is one of the most renowned companies for the purpose of holding the
record of the most U.S patents generated by the business for 25 consecutive years. The major
inventions included by the IBM are ATM, floppy disk, magnetic stripe card and SQL (IBM,
2018).
Strategy
Since the business is moving in the more digitalised media and now the time has
changed as the customers are not attracted towards the traditional software, IBM has
struggled with decreasing the revenue from the year 2013 to 2017 (IBM, 2017). Thereafter
the cost increased as the IBM invested to develop in the new programs such as artificial
intelligence and the data analytics programs the company is catering to its customers online.
From the following analysis it can also be observed that the IBM is struggling to get back to
the profitable positions in terms of the hardware and the technology services.
Financial Ratio Analysis
Financial Ratios are one of the numerous techniques of examining of the data by the
stock examiners and investors to dissect an organization or industry. Nobody reliably predicts
stock value developments; however, ratios frequently feature an organization's quality as well
as potential shortcomings. Ratios can likewise give blended flags about the organization's

IBM ANALYSIS 3
budgetary wellbeing and can vary differently among organizations, enterprises, and over the
period of the 5 years as it has been reported.
Liquidity Ratios
Liquidity Ratios 2013 2014 2015 2016 2017
Current Ratio
Current assets 1.28 1.25 1.24 1.21 1.33
Current Liabilities
Quick Ratio
Quick assets 0.54 0.44 0.48 0.49 0.58
Current Liabilities
Working Capital
Current Assets - 11196 9822 8235 7613 12372
Current Liabilities
The liquidity ratios depict the financial ability of the company to pay back the current
liabilities out of the current and the liquid assets the company is having. From the above
analysis it can be seen that the company’s liquidity position is sound (Grant, 2016). The
current ratio of the company has been in the range of the 1.21 to 1.33. The current ratio in the
current year is 1.33 which is a healthy ratio as the company is able to pay the debts, however,
ideally the ratio shall be in the bracket of 2:1.
2013
2014
2015
2016
2017
1.14 1.16 1.18 1.20 1.22 1.24 1.26 1.28 1.30 1.32 1.34
Current Ratio
Current Ratio