WEST UNIVERSITY OF TIMIŞOARA

FACULTY OF ECONOMY AND BUSINESS ADMINISTRATION

STUDY PROGRAM: MANAGEMENT OF BUSINESS ORGANISATIONS
DISCIPLINE: Project Financial Performance Analysis
Professor:
Cecilia Jurcut
cecilia.jurcut@e-uvt.ro

ACADEMIC YEAR: 2022-2023

FINANCIAL RATIOS
IBM

STUDENT:
Razvan – Cristian Muscă
 CONTENT:

1. Introduction................................................................................................................................3
2. Descriptive section (description of the company)................................................................3
3. Analytical section........................................................................................................................3
4. Conclusions?................................................................................................................................3
1. Introduction

 Scope of the study;

I write this study to show how easily we can identify ratios and see the impact on the
company finances.

TOP USED RATIOS.

RATIO DEFINITION

1. Current Ratio Total current assets divided by total current liabilities.

2. Quick Ratio (Acid- Test The sum of cash and accounts receivable divided by total current
Ratio) liabilities.

3. Price/Earnings Ratio Average common stock price divided by net income per share

 General and specific objectives of the study;

After this study, the reader can find (data) and how it can be handled.
Will interpret very well a horizontal analysis.

 Significance of the study;

The study is vital because, base on ratios, stakeholders/shareholders take decisions.

 The organisation of the study.

IBM – an IT manufacturing company

2. Descriptive section (description of the company)

 Company history;
IBM was founded in 1911 in Endicott, New York, as the Computing-Tabulating-Recording
Company (CTR) and was renamed "International Business Machines" in 1924. IBM is
incorporated in New York and has operations in over 170 countries.[7]

 Activity sector;

IBM is best known for producing and selling computer hardware and software, as well as
cloud computing and data analytics. The company has also served as a major research and
development corporation over the years, with significant inventions like the floppy disk, the
hard disk drive, and the UPC barcode.

 Company’s logistics;

IBM (International Business Machines) Mission and Vision Statement Analysis.

IBM's mission statement is “to lead in the creation, development, and
manufacture of the industry's most advanced information technologies, including
computer systems, software, networking systems, storage devices, and
microelectronics. IBM also collaborates with hundreds of suppliers across its
multi-tier global network to build highly configurable and customised products to
customer specifications. Previously, the IBM supply chain ran on legacy systems
spread across different organisational silos, making information sharing slow
and incomplete.

 Internal work organisation

IBM has an organizational structure characterized by product-based divisions.
This allows the company to carry out its strategy of developing innovative and
competitive products across multiple markets.

3. Analytical section.

 Identification of the financial ratios;

Current Ratio

Current and historical current ratio for IBM (IBM) from 2010 to 2022. Current ratio can be defined as
a liquidity ratio that measures a company's ability to pay short-term obligations. IBM current ratio for
the three months ending September 30, 2022 was 0.95.

Quick Ratio (Acid- Test Ratio)

IBM Quick Ratio Historical Data

Date Current Assets - Inventory Current Liabilities Quick Ratio

2022-09-30 $27.21B $30.47B 0.89

Current and historical ratio for IBM (IBM) from 2010 to 2022. The price to earnings ratio is
calculated by taking the latest closing price and dividing it by the most recent earnings per share
(EPS) number. The PE ratio is a simple way to assess whether a stock is over or under valued and is
the most widely used valuation measure. IBM PE ratio as of December 09, 2022 is 16.58.

Ratios based on activity.

Current and historical net profit margin for IBM (IBM) from 2010 to 2022. Net profit margin can be
defined as net Income as a portion of total sales revenue. IBM net profit margin for the three months
ending September 30, 2022 was .

IBM Net Profit Margin Historical Data

Date TTM Revenue TTM Net Income Net Margin

2022-09-30 $60.53B $1.26B 2.08%

2022-06-30 $59.68B $5.59B 9.36%

2022-03-31 $58.36B $5.52B 9.46%

2021-12-31 $57.35B $5.74B 10.01%

2021-09-30 $42.58B $4.77B 11.19%

2021-06-30 $46.89B $5.33B 11.38%

2021-03-31 $50.80B $5.37B 10.57%

2020-12-31 $55.18B $5.59B 10.13%

 Calculation of the financial ratios;

Current ratio

It is calculated as a company's Total Current Assets divides by its Total Current
Liabilities. International Business Machines's current ratio for the quarter that ended in
Sep. 2022 was 0.95. International Business Machines has a current ratio of 0.95.

Quick Ratio (Acid- Test Ratio)

Gross profit margin : 241.141.000 *100
____________________ = 0.42

57.350.000
Net profit margin: 5.743.000
__________ = 0.10

57.350.000.

This net margin is right at the “border” at minimum, given by the book. So a comfortable one
can be 12-15%..

14.95 and the
Inventory Turnover TTM industry average is
61.66 !!
 

4. Conclusions?

 A synthetic presentation of the financial and economic performance of the company;

The company cannot currently fully pay back its current liabilities. During the past 13 years,
International Business Machines's highest Quick Ratio was 1.79.

 Proposals and recommendations for the improvement of the company’s performance.

Increasing sales, lower operating costs and more cash ready for operational activity.
  The financial performance is low in comparison of the industry. They must increase sales and
dimmish the R&D costs and capitalisation costs.

5. Extra vital words.

Thank You to the audience!

Razvan Cristian Musca