International Business Machines (IBM)
Liquidity ratios
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 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 | 1.09 | 1.83 | 1.36 |
| Quick ratio | 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 | 0.91 | 1.68 | 1.18 |
| Cash ratio | 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 | 0.31 | 1.09 | 0.46 |
Based on the provided data, let's analyze IBM's liquidity ratios over the past eight quarters.
1. Current Ratio: The current ratio measures IBM's ability to cover its short-term obligations with its current assets. IBM's current ratio has fluctuated over the past quarters, ranging from 0.88 to 1.16. While a current ratio below 1 indicates potential liquidity issues, IBM has generally maintained current ratios slightly below or around 1, suggesting that the company may have faced challenges in meeting its short-term obligations.
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. IBM's quick ratio has shown similar fluctuations as the current ratio, ranging from 0.80 to 1.08. The trend indicates that IBM may have had difficulties in quickly covering its short-term obligations with its most liquid assets.
3. Cash Ratio: The cash ratio focuses solely on IBM's ability to cover its short-term liabilities with cash and cash equivalents. IBM's cash ratio has ranged from 0.58 to 0.87, reflecting the company's ability to meet its immediate financial obligations using its cash reserves. The ratios below 1 suggest that IBM may have had limited liquidity to address short-term needs solely with cash on hand.
Overall, the liquidity ratios demonstrate that IBM has been managing its short-term obligations with some challenges, as indicated by ratios consistently below the ideal value of 1 for all three measures. However, the company's ability to generate cash and maintain liquidity levels will be essential in ensuring its financial stability in the future. Monitoring and potentially improving these liquidity ratios could enhance IBM's ability to meet its short-term financial commitments effectively.
See also:
International Business Machines Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 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 | 78.47 | 89.65 | 95.34 |
The cash conversion cycle for International Business Machines Corp. has shown fluctuations over the past eight quarters. In Q1 2022, the company had a relatively high cash conversion cycle of 20.86 days, indicating it took a longer time to convert its investments in inventory and other resources into cash inflows. Subsequently, there was a notable improvement in the following quarters, with the cycle decreasing to 13.21 days in Q2 2022 and further to 8.87 days in Q3 2022.
However, this positive trend did not persist, as the cash conversion cycle increased again to 11.61 days in Q4 2022 and remained at elevated levels for the next three quarters. Notably, there was a substantial reduction in the cycle in Q4 2023 to 6.99 days, suggesting a more efficient management of working capital during that period.
Overall, the varying trends in the cash conversion cycle indicate fluctuations in the efficiency of International Business Machines Corp. in managing its cash inflows and outflows, inventory turnover, and accounts receivable collection. Investors and stakeholders may closely monitor these fluctuations to assess the company's operational performance and financial health.