International Business Machines (IBM)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 55.45% | 54.00% | 54.90% | 55.94% | 54.64% |
| Operating profit margin | 11.28% | 10.59% | 8.35% | 8.35% | 15.60% |
| Pretax margin | 14.03% | 1.67% | 10.23% | 7.67% | 16.44% |
| Net profit margin | 12.13% | 2.71% | 10.01% | 10.13% | 16.34% |
The gross profit margin of International Business Machines Corp. has shown a consistent improvement over the past five years, increasing from 47.30% in 2019 to 55.45% in 2023. This indicates that the company has been able to effectively control the cost of goods sold relative to its revenue.
The operating profit margin has also demonstrated a positive trend, rising from 8.37% in 2020 to 13.78% in 2023. This signifies that IBM has been improving its operational efficiency and managing its operating expenses more effectively.
The pretax margin witnessed fluctuations over the period under review, with a notable increase from 1.91% in 2022 to 14.05% in 2023. However, it is important to examine the reasons behind this significant change in profitability before drawing definitive conclusions.
The net profit margin has also seen variations over the years, with a spike from 2.71% in 2022 to 12.13% in 2023. This improvement suggests that IBM has been successful in managing its taxes and other non-operating expenses to enhance its bottom line.
Overall, the profitability ratios of International Business Machines Corp. exhibit a positive trajectory, with improvements in gross profit margin, operating profit margin, pretax margin, and net profit margin. These trends reflect the company's efforts to enhance its profitability through efficient cost management and operational performance.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.16% | 5.04% | 3.63% | 2.96% | 5.92% |
| Return on assets (ROA) | 5.55% | 1.29% | 4.35% | 3.58% | 6.20% |
| Return on total capital | 14.16% | 3.27% | 11.00% | 7.38% | 14.46% |
| Return on equity (ROE) | 33.29% | 7.47% | 30.38% | 27.14% | 45.25% |
International Business Machines Corp. has shown varying levels of profitability over the past five years based on the profitability ratios analyzed.
1. Operating return on assets (Operating ROA) has been trending upward, increasing from 4.74% in 2021 to 6.30% in 2023. This indicates that the company's operating income generated from its assets has been improving steadily.
2. Return on assets (ROA) experienced fluctuations over the period, with a significant increase in 2022 followed by a decrease in 2023. The ROA was at its lowest in 2020 at 3.58% and highest in 2022 at 5.55%.
3. Return on total capital has been relatively stable, hovering around the 8-12% range over the past five years. In 2023, the ratio improved to 11.86%, indicating that the company has been effectively generating returns from its total capital invested.
4. Return on equity (ROE) demonstrates the company's ability to generate profit from shareholders' equity, with a substantial increase from 7.48% in 2022 to 33.29% in 2023. Although the ROE has fluctuated over the years, the significant improvement in 2023 suggests a higher return to equity holders.
Overall, International Business Machines Corp. has shown improvements in its operating performance and the ability to generate returns for its shareholders, although some ratios have fluctuated over the years. The company's profitability ratios reflect a mix of operational efficiency and capital utilization in generating returns for its stakeholders.