International Business Machines (IBM)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 10,285,000 | 2,229,000 | 7,022,000 | 5,518,000 | 10,835,000 |
| Long-term debt | US$ in thousands | 50,121,000 | 46,189,000 | 44,917,000 | 54,217,000 | 54,102,000 |
| Total stockholders’ equity | US$ in thousands | 22,533,000 | 21,944,000 | 18,901,000 | 20,597,000 | 20,841,000 |
| Return on total capital | 14.16% | 3.27% | 11.00% | 7.38% | 14.46% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $10,285,000K ÷ ($50,121,000K + $22,533,000K)
= 14.16%
IBM's return on total capital has shown a fluctuating trend over the past five years. The company's return on total capital was highest in 2019 at 12.59%, but decreased in 2020 to 8.26%. However, there has been an upward trend since 2020, with returns improving to 9.72% in 2021, 11.22% in 2022, and reaching 11.86% in 2023.
Overall, the return on total capital for IBM indicates the company's efficiency in generating returns from both its equity and debt capital. It suggests that the company has been effectively utilizing its capital to generate profits, with a positive trend in recent years indicating improving efficiency and profitability. It is important for investors to monitor this ratio over time to assess the company's capital management and profitability.
Peer comparison
Dec 31, 2023