International Business Machines (IBM)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.04 | 1.06 | 1.13 | 0.96 | 0.91 | 1.06 | 1.16 | 0.92 | 0.95 | 0.88 | 0.92 | 0.88 | 0.84 | 0.84 | 0.93 | 0.98 | 1.05 | 1.04 | 0.96 | 1.02 |
| Quick ratio | 0.67 | 0.69 | 0.80 | 0.62 | 0.56 | 0.70 | 0.97 | 0.73 | 0.52 | 0.45 | 0.71 | 0.66 | 0.63 | 0.65 | 0.74 | 0.82 | 0.88 | 0.87 | 0.80 | 0.87 |
| Cash ratio | 0.44 | 0.47 | 0.59 | 0.39 | 0.36 | 0.50 | 0.56 | 0.28 | 0.31 | 0.24 | 0.31 | 0.22 | 0.22 | 0.22 | 0.30 | 0.35 | 0.41 | 0.37 | 0.29 | 0.24 |
The analysis of International Business Machines' liquidity ratios indicates fluctuations over the reporting periods.
1. Current Ratio: The current ratio, which measures IBM's ability to cover short-term liabilities with its current assets, shows a declining trend from 2019 to 2022. However, there is an improvement in the current ratio in the most recent periods, reaching above 1, indicating improved liquidity in the short term.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. The quick ratio follows a similar trend to the current ratio, with a decline in the earlier periods and a recent uptick. The ratio falls below 1 in some periods, suggesting a potential issue in meeting short-term obligations without relying on inventory liquidation.
3. Cash Ratio: The cash ratio, which focuses solely on cash and cash equivalents to cover current liabilities, shows variations over time. The ratio increases from 2019 to 2022, indicating a stronger position in terms of pure cash availability. However, the ratio fluctuates in later periods, which may indicate changing cash management strategies.
Overall, while the recent periods show some improvement in liquidity ratios for IBM, it is essential to continue monitoring these ratios to ensure the company maintains a healthy liquidity position to meet its short-term obligations effectively.
See also:
International Business Machines Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 6.92 | 11.10 | 7.76 | 6.23 | 10.25 | 8.74 | 48.09 | 52.92 | 11.67 | 13.62 | 62.80 | 62.78 | 67.54 | 73.72 | 74.93 | 90.61 | 86.86 | 84.93 | 98.21 | 104.80 |
The Cash Conversion Cycle (CCC) of International Business Machines (IBM) is a metric that measures the efficiency of the company's working capital management. The CCC represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter CCC indicates that the company is able to efficiently manage its cash flows and working capital.
Based on the provided data, IBM's CCC has shown fluctuations over the period from December 31, 2019, to December 31, 2024. The CCC decreased steadily from 104.80 days on December 31, 2019, to 6.23 days on December 31, 2023, before slightly increasing to 7.76 days on March 31, 2024, and further to 11.10 days on September 30, 2024.
The substantial decrease in the CCC from 2019 to 2023 indicates that IBM improved its efficiency in managing its working capital during that period. The significant reduction in the CCC is a positive signal as it suggests that IBM was able to streamline its operations, reduce inventory holding periods, and collect receivables more effectively.
However, the slight increase in the CCC in the latter part of 2024 could indicate a potential slowdown in IBM's cash conversion efficiency. It may be a signal of increased inventory levels, longer payment terms to suppliers, or delays in collecting receivables.
Overall, IBM's CCC trend reflects an initial improvement in working capital efficiency followed by a slight deterioration. Continuous monitoring and analysis of the CCC can help IBM identify areas for improvement in its working capital management to enhance overall financial performance.