International Business Machines (IBM)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	23.74	17.94	15.69	13.42	16.17
Receivables turnover	8.01	4.26	3.83	2.94	2.43
Payables turnover	6.67	6.87	6.54	6.03	5.35
Working capital turnover	—	—	—	—	80.27

Inventory Turnover:
- International Business Machines Corp.'s inventory turnover has been fluctuating over the past five years, ranging from 15.68 to 25.11 times. The ratio reached its peak in 2019 and has since experienced some volatility. The high turnover indicates that IBM efficiently manages its inventory levels, translating inventory into sales multiple times a year.

Receivables Turnover:
- The receivables turnover for IBM has shown a relatively stable trend over the five-year period, with values ranging from 3.24 to 8.23. The ratio measures how efficiently the company collects its accounts receivables. A higher turnover ratio implies that IBM is effective in converting credit sales into cash quickly.

Payables Turnover:
- IBM's payables turnover has exhibited consistency over the years, with values oscillating between 6.54 and 8.30. The ratio indicates the speed at which the company pays off its suppliers. A lower payables turnover suggests that IBM takes more time to settle its payables, possibly indicating good relationships with suppliers.

Working Capital Turnover:
- The data indicates that IBM did not report a working capital turnover figure for the period under review. This ratio measures how effectively the company utilizes its working capital to generate revenue. The absence of a figure may be attributed to IBM's specific reporting practices or business operations.

Overall, analyzing IBM's activity ratios provides insights into the company's inventory management, accounts receivables collection efficiency, payables handling, and the overall utilization of working capital.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	15.38	20.35	23.27	27.20	22.57
Days of sales outstanding (DSO)	days	45.58	85.68	95.32	123.95	150.49
Number of days of payables	days	54.72	53.11	55.81	60.54	68.26

Activity ratios are used to assess how efficiently a company manages its operations and resources. Let's analyze International Business Machines Corp.'s activity ratios over the past five years:

1. Days of Inventory on Hand (DOH): This ratio indicates how many days, on average, inventory is held before being sold. A lower DOH is generally preferred as it suggests a faster turnover of inventory. IBM's DOH has fluctuated over the years, with a decreasing trend from 2021 to 2023. This could indicate improved inventory management and efficiency in selling products.

2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for a company to collect revenue after a sale is made. A lower DSO is typically better as it signifies faster collection of receivables. In IBM's case, there has been a fluctuating trend in DSO over the years, with a noticeable decrease from 2019 to 2021, followed by a slight increase in 2022 and 2023. This could suggest varying effectiveness in collecting revenue from customers.

3. Number of Days of Payables: This ratio represents the average number of days a company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to pay its bills, which can improve cash flow but could strain supplier relationships. IBM's number of days of payables has increased over the years, indicating a longer payment cycle, which may have positive implications for its cash management.

Overall, IBM's activity ratios show fluctuations over the years, signaling changes in its operational efficiency and management of working capital. It is important for the company to continue monitoring and optimizing these ratios to maintain a healthy balance between managing inventory, collecting revenue, and paying suppliers efficiently.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	—	11.35	10.07	8.89	5.77
Total asset turnover	0.46	0.48	0.43	0.35	0.38

The fixed asset turnover ratio for International Business Machines Corp. has shown a consistent upward trend over the past five years, indicating an improvement in the company's efficiency in generating revenues from its fixed assets. The ratio has increased from 7.71 in 2019 to 11.25 in 2023, reflecting the company's ability to utilize its fixed assets more effectively to drive sales.

On the other hand, the total asset turnover ratio has exhibited some fluctuation over the same period, with a slight decline from 0.51 in 2019 to 0.46 in 2023. This suggests that while the company's overall asset utilization might have decreased slightly, its efficiency in utilizing fixed assets specifically has significantly improved.

Overall, the increasing trend in the fixed asset turnover ratio indicates a positive development in International Business Machines Corp.'s long-term activity efficiency, which may lead to improved financial performance and profitability in the future.