IBM is a multinational company that manufactures computer software, hardware, and consulting services.
This report evaluates IBM’s 2013 annual report in comparison to the two years prior. It illustrates IBM’s 2013 annual report retrieved from the company website. To further understand IBM’s financial statements, it is imperative to create a common sized income statement to view the data as ratios. Additionally, the report will include a four-part analysis of the company. The first section will summarize my overall understanding and findings of IBM. The second section will illustrate the common size income statement as a table of ratios.
The third section will explain the findings drawn from the common size income statement and balance sheet ratios. Finally, the fourth section will compare the report with two scholarly reports regarding IBM’s financial performance. Section 1According to IBM’s CEO, Virginia Rometry, IBM plans to use Big Data to their advantage due to the incredible results from the amount of data produced and used every single day around the world. She explained that IBM’s strategy is to transform industries and professions with data, -remaking enterprise IT for the era of the cloud and enabling systems of engagement for enterprises. She further stated that IBM invested “$3.
1 billion for ten acquisitions. $3.8 billion in net capital expenditures and $6.2 billion in R&D while earning the most US patents for the 21st straight year” (). With this, it is safe to safe that IBM is a leader in the data and analytical technologies field. From my observation, IBM experienced steady increases between 2011 and 2013. There was a net income growth of 1.
7% during that same period. Moreover, IBM had an increase in short-term liability and profitability as shown in the table of ratio. However, as the income grew, IBM’s debt to equity ratio also increased at a rate of 1.74. IBM’s equity ratio was higher than any of its competitors and IT industry average (StockanalysisNet, 2017).Section 4They seem to be a difference of opinion regarding IBM’s financial decline. However, IBM remains an industry leader in information technology and is in the fold with its competitors Hewlett-Packard with a net income of $11 billion (Thestreet, 2017).
CNN tech expressed that IBM’s hardware division lost a large amount of money in quarter 3 of 2013. The lost is considered as a contributing factor to many companies transitioning to cloud information storage as an alternative to the traditional storage. ConclusionThe report from IBM was very informative.
It allowed a thorough evaluation of IBM’s financial performance and displayed how the company is doing financially. This report is also useful for shareholders and stakeholders to make investing and partnership decisions. They identified strategies need to make markets, which include transforming industries and professions with data (IBM, 2013). Overall, we summarize the data from the report into meaningful information, created tables to display a visual representation of the finances, and finally compared the findings to two scholarly articles.