International Business Machines (IBM)

Solvency 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
Debt-to-assets ratio 0.36 0.39 0.39 0.37 0.38 0.38 0.40 0.36 0.36 0.35 0.35 0.34 0.33 0.33 0.34 0.35 0.36 0.36 0.34 0.36
Debt-to-capital ratio 0.65 0.68 0.70 0.69 0.68 0.70 0.71 0.68 0.69 0.70 0.71 0.70 0.68 0.69 0.71 0.72 0.72 0.73 0.72 0.72
Debt-to-equity ratio 1.83 2.17 2.32 2.22 2.12 2.28 2.49 2.10 2.24 2.28 2.44 2.38 2.11 2.22 2.39 2.63 2.60 2.70 2.63 2.60
Financial leverage ratio 5.02 5.49 5.90 6.00 5.60 5.96 6.19 5.80 6.27 6.57 7.00 6.98 6.49 6.69 6.95 7.57 7.27 7.50 7.67 7.30

The solvency ratios of International Business Machines (IBM) provide insights into its ability to meet its financial obligations and maintain financial stability.

1. Debt-to-assets ratio: This ratio indicates the proportion of IBM's assets that are financed through debt. Over the period from December 2019 to December 2024, IBM's debt-to-assets ratio has fluctuated within the range of 0.33 to 0.40, with a slight increase in the most recent period. A lower debt-to-assets ratio is generally considered favorable as it signifies lower financial risk.

2. Debt-to-capital ratio: IBM's debt-to-capital ratio represents the percentage of capital that comes from debt financing. This ratio has shown variability over time, with a declining trend from 0.72 in December 2019 to 0.65 in December 2024. A decreasing debt-to-capital ratio indicates a decreasing reliance on debt for funding capital expenditures.

3. Debt-to-equity ratio: The debt-to-equity ratio measures the proportion of debt and equity in financing IBM's assets. The trend of this ratio from December 2019 to December 2024 shows fluctuations, with a notable decline from 2.63 in March 2020 to 1.83 in December 2024. A lower debt-to-equity ratio implies that IBM is relying more on equity financing than debt, which is generally viewed positively by investors.

4. Financial leverage ratio: The financial leverage ratio reflects the extent to which IBM employs debt in its capital structure. Over the analyzed period, this ratio has decreased gradually from 7.67 in March 2020 to 5.02 in December 2024. A decreasing financial leverage ratio suggests a reduction in the company's financial risk and dependence on borrowed funds.

Overall, the solvency ratios of IBM indicate a stable financial position with a decreasing trend in leverage ratios and a shift towards a more conservative debt structure. This analysis suggests that IBM has been effectively managing its debt levels and improving its solvency position over the analyzed period.

Coverage 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
Interest coverage 5.34 4.52 6.22 6.40 6.33 2.23 2.08 1.83 1.50 5.99 5.86 6.08 4.43 5.11 5.08 4.28 6.03 5.43 6.18 8.06

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. In the case of International Business Machines (IBM), the interest coverage ratio has shown fluctuations over the provided financial periods.

From December 31, 2019, to June 30, 2021, IBM's interest coverage ratio ranged between 4.28 and 8.06, indicating that the company had a healthy ability to meet its interest obligations with its operating income during this time frame.

However, a decline in the interest coverage ratio was observed from September 30, 2021, to December 31, 2022, with the ratio dropping to as low as 1.50. This decrease suggests that IBM's operating income may have been insufficient to cover its interest expenses during these periods, indicating a potential higher risk of default on debt payments.

Subsequently, there was an improvement in the interest coverage ratio from March 31, 2023, to March 31, 2024, where the ratio ranged between 2.08 and 6.40. This recovery suggests that IBM may have taken steps to enhance its operating performance or manage its debt structure more effectively.

As of December 31, 2024, IBM's interest coverage ratio stood at 5.34, indicating that the company's operating income was 5.34 times its interest expenses. Overall, the trend in IBM's interest coverage ratio reflects periods of strength as well as challenges in managing its interest obligations relative to its operating income.

See also:

International Business Machines Solvency Ratios (Quarterly Data)