IBM Financial Statement Analyst

In this Financial Statement Analyst I have included information that is to help better guide you as the investors, creditors, and
management on how well the company performed in 2014 compared to the previous year 2013 as well the industry average. I will be
using different ratios to help determine if IBM had a successful year compared to the previous year. These ratios will help us
determine the profitability, liability and equity of the IBM as well where we stand against our competitors.
Current and Long-term Debt
Here we will be evaluate current liabilities, short-term risk, and liquidity. This section helps up evaluate they companies Short -term
debt. Current liabilities are liabilities that are that are due to be paid or services preformed within one year such as accounts payable,
interest, and unearned revenue. This can depending if the company issuing a fiscal year or a 12 month system would determine when
it should be paid or services preformed. Long-term liabilities are debts that are not meant to be repaid off or paid within one year.
Usually these are Mortgages payable Notes payable. Typically we see this when a company buys Land and buildings.

Working capital: this helps us by taking current assets minus current liability. This helps us see if the company is making or

losing its value in dollars. We do this b taking (current assets current liabilities).
Current ratio is similar to Working Capital but it uses a percentage instead of a dollar amount. (Current assets/Current

liabilities).
Cash ratio helps use determine IBM can pay off its current liabilities with the cash plus the cash equivalents they have on hand.

(Cash + Cash equivalence/Current liabilities)

Acid-test-Ratio this helps us determine how fast they can liquidate their assets to pay off all of their current liabilities if I had to
come down to it. (Cash + Short-term Invest + Cash receivables/Current liabilities)
Long-term Ratios:

Debt ratio this helps us determine the company assets and how much we financed to obtain those assets. (Total liabilities/Total

assets)
Debt to Equity ratio shows us how much of our liabilities are comparative to our equity that we have.(Total liabilities/Total

equity)
Times-interest-earned ratio helps us calculate and determine if they company is capable to pay off all of its interest expense.
(Net income + Income tax expense + Interest expense/Interest expense)

As you can see right here in this chart IBM has more Debt than the Industry Average. Also you can see there has been a slight
decrease in the assets. Also our debt to equity raised a big amount. At this on going rate IBM would be losing money than gaining.
Profitability
The reason we evaluate a companys profitability it to determine how much the company is making after we deduct the
expenses and cost of goods sold to make or service the product. Every company wants to generate the most profit possible. We try to
determine how much our net income is by removing our cost of goods sold. This will help tell us if we are making money or losing it,
it also us determine future profits.

Profit margin ratio: This ratio lets us know the amount we have earned from net sales (Net Income/Net sale)
Return on total assets: This will show us how much the company profited from its assets. (Net Income + Interest

expense/Avg total assets)

Gross profit percentage: This tells us how much we more we made from our cost of goods. (Gross profit/Net sales revenue)
Rate of return on C/S equity: This shows us how much net income will be ready for the Stockholders by how much they

invested into the company. (Net income/Average common stockholders equity)

Earnings per share: This tells if the shares of the common stock contributed with our net Income (loss). (Net
Income/weighted average number of common shares outstanding)

Here we can see the change in our profit margin we went down.35% but we are still above the industry avg. Our return on
assets have drop by.28% and by that dropping were are below industry. Although we did have a .50 increase in gross profit, but we are
still looking to be losing our profit if we do not find the area where we are losing revenue.
Efficiency
This section will help us determine the amount of days the company takes to collect money earned from its customers as well
help us determine the amount of inventory we move and how fast we move this inventory. The faster we can collect money and
inventory the less we will be likely to lose.

Inventory turnover: This will help us by calculating how much or our inventory we moved during the year. (Cost of goods

sold/Avg merchandise inventory)

Days sales in Inventory: This helps us by telling us how long did we sit on our inventory. (365/Inventory turnover)
Asset turnover: This tells us how well or bad our business does by helping us see how much our assets help our sales. (Net

Sales/Avg total assets)

Account receivable turnover: This tells us how often we take to collect our money or goods during the year. (Net credit

sales/Avg net accounts receivable)

Days sales in receivable: This will tell us how long it takes to collect from our customers by telling us how many days on

average. (365/Accounts receivable turnover ratio)

Free cash flow: This tells us how much cash we will have after we pay for our investments and dividends. (Net cash

operating activities cash payments long-term investments cash dividends.)

Cash Flow to assets: This will let us know how much our assets profit from our cash flow. (Operating cash flow/Avg total

assets)
Cash Flow per share: This will tell us how much per shares are after taking taxes and depredations. (Operating cash
flow/number of shares outstand)

The chart show us that the inventory has changed by -.16 this is good because we are selling more inventory than the industry
adv. Our days sales in receivable is also doing well we are receiving more of our receivables than the industry average. Also our cash
flow to assets went up .1 it is not a lot but it is something we are getting more cash from our assets.
Stockholder and investors relations

Here we will be evaluation to help you as a stockholder or future investor if IBM is a company that you will be interested in
staying with or joining. This will show us the amount of dividends that are paid at the end of the year and how much are yield. Also
we will be showing the market price to stockholders per share.

Price/earnings ratio: This ratio will help us by evaluating the market price compared to our companys earnings by the dollar.

(Market price per share of common stock/Earrings per share)

Dividend yield: Here we have how much the stock market value will be in percentage. Also this will show us how much we pay to the

stock holders equity. (Annual dividend per share/Market price per share)
Dividend payout: This tells us the amount we declare to the common stockholders per share. (Annual dividend per share/Earnings per
share)

Here we can see that our price per earnings have gone up as well as the dividend payout and yield. This is a good thing
because this show us that the investors stock is rising and so is the amount they receive for their dividends.
Conclusion.
This show me that although the stock holders are making some money off of their investments I would be caution about there
future. IBM has way over that average in debt and also the are not making a big jump in gross profit. Their Debt is rising faster than
there profit. They have to find the problem and fix it because if they do not there company is almost going to be 100% in debt and the
stockholders and investors may lose their money and the company may be forced to liquidate and shut down.