IBMs Financial Performance - Essay Example

The computations indicate the difference between the performance of IBM and the industry’s average outcomes. In terms of the price-earnings ratio, the IBM price-to-earnings ratio is 13.33 times. On the other hand, the industry average generated an unfavorably lower 13 times price-to-earnings ratio (Crosson, 2011).

               Likewise, the above computations show the difference between the performance of IBM and the industry’s average outcomes. In terms of the price-earnings ratio, the IBM price-to-earnings ratio is 13.33 times. On the other hand, the industry average generated an unfavorably lower 13 times the price-to-earnings ratio.

Ratio

IBM

Industry Average

Remarks

Dividend Yield

0.4 %

3 %

IBM is better than Industry

Inventory Turnover

22.21

12 times

IBM is better than Industry

Days sales Inventory

110 days

30 days

The industry is better than IBM

Net Profit Margin

20%

12 %

IBM is better than the industry

Return on Equity

31%

15 %

IBM is better than Industry

 

Dividend Yield

 

 

 

 

 

 

 

 

Dividends given

=

0.85

=

     0.004

 

 

Stock Market Price

 

191.55

   

 

 

 

 

 

 

 

 

 

Inventory Turnover Inventory

 

 

 

 

 

 

 

 

Cost of Goods Sold

=

   54,209.00

 =

     22.21

 

 

ave invite

 

     2,441.00

   

 

 

 

 

 

 

 

 

Net Profit Margin

 

 

 

 

 

 

 

 

Net Income

=

     5,883.00

 =

       0.20

 

 

Net Sales

 

   29,304.00

   

 

 

 

 

 

 

 

 

 

Return on Equity

 

 

 

 

 

 

 

 

Net Income

=

     5,883.00

 =

       0.31

 

 

Total Equity

 

   18,860.00

   

 

 

 

 

 

 

 

 

 

                 The above table shows IBM’s performance, in relation to the performance of the company (Crosson, 2011). IBM’s year-end 0.4 percent dividend yield for 2012. On the other hand, the industry average performed more favorably with its 3 percent dividend yield.  The company’s inventory turnover ratio is 22.21 times. The ratio is more favorable to IBM than the lesser 12 time periods. The above table also shows that the IBM entity generated a favorable day’s sales inventory of 16.21 days. The industry average of 30 days is less favorable compared to the IBM days sales production output. IBM generated a 20 percent net profit margin. The total amount is favorably higher than the 12 percent net profit margin generated by industry competitors. The company’s return on equity figure indicates the company generated a favorable 31 percent return on equity. The ratio is favorably higher than the industry average of 15 percent. The ratio deals with how long management or the owner can recover the amount invested in the business.

 

Ratio

IBM

Industry Average

Remarks

Receivables Turnover

3.3 times

6 times

IBM is better than Industry

Days Sales Outstanding

18 days

60 days

IBM is better than Industry

 

Receivables Turnover

 

 

 

 

 

 

 

 

Net Credit Sales

=

104507

=

3.30954

 

 

Average receivables

 

31577.5

   

 

 

 

 

 

 

 

 

 

Days Sales  Outstanding

 

 

 

 

 

 

 

 

Number days

=

60

=

18

 

 

Receivables turnover

 

3.30954

   

 

 

 

 

 

 

 

 

 

                  The above table indicates IBM’s financial performance in terms of collecting the customer’s receivables (Warren, 2009). The above table shows that IBM’s receivables turnover ratio is 3.3 times. The IBM ratio is less favorable compared to the higher industry average amounting to 6 times. The day's sales outstanding of IBM is 18 days. The IBM figure is better than the industry average’s  60 days of sales outstanding. The ratio shows that it took IBM a shorter time to collect the customer’s receivable accounts when compared to the industry average’s receivables collection efforts

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