International Business Machines (IBM)
Payables turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 27,201,000 | 27,560,000 | 27,842,000 | 25,865,000 | 24,314,000 |
| Payables | US$ in thousands | 4,032,000 | 4,132,000 | 4,051,000 | 3,955,000 | 4,033,000 |
| Payables turnover | 6.75 | 6.67 | 6.87 | 6.54 | 6.03 |
December 31, 2024 calculation
Payables turnover = Cost of revenue ÷ Payables
= $27,201,000K ÷ $4,032,000K
= 6.75
The payables turnover ratio measures how efficiently a company manages its payable obligations by comparing the amount of purchases made on credit to the average accounts payable outstanding during a specific period. For International Business Machines (IBM), the payables turnover ratio has shown a consistent trend over the years.
In 2020, IBM's payables turnover was 6.03, indicating that the company paid its suppliers approximately 6 times during the year. The ratio increased slightly to 6.54 in 2021, suggesting an improvement in the efficiency of managing its payables. Subsequently, the payables turnover ratio continued to rise to 6.87 in 2022, signaling that IBM was paying its suppliers more frequently.
However, in 2023, the payables turnover ratio dipped to 6.67, possibly indicating a slowdown in the rate at which IBM was settling its accounts payable. Nonetheless, the ratio rebounded in 2024 to 6.75, showing a slight improvement in the efficiency of managing payables compared to the previous year.
Overall, the increasing trend in IBM's payables turnover ratio from 2020 to 2022 signifies more efficient management of the company's payables. The slight drop in 2023 followed by a recovery in 2024 suggests fluctuations in IBM's payment dynamics or supplier relationships. It is crucial for IBM to monitor its payables turnover ratio consistently to ensure optimal cash flow management and maintain healthy supplier relationships.
Peer comparison
Dec 31, 2024