ANSWER EACH QUESTION - show a fully decomposed ROE into profit margin, asset turnover, return-on-assets, and financial leverage by quarter. Make sure to discuss trends across quarters. Controlled for seasonality (computed the same-quarter to same-quarter percentage changes). Assessed the impact of each segment on firm profitability. Show all your work and support where the numbers are from to study this effectively.
IBM Required: 10. 11. 12. Compute the ve component ratios of a decomposition of ROE (net prot margin, total asset turnover, return on assets, nancial leverage, return on equity) for IBM's fiscal years 2016-2019 (present your results) What patterns do you see? What are the implications of these patterns? Compute each segment's revenue as a percentage of IBM total revenues by quarter. What patterns do you see? What are the implications of these patterns? Compute the gross margin percentage, by quarter, for each of IBM's segments (present your results). What patterns do you see? What are the implications of these patterns? Compute the year-to-year change, by quarter, in Revenues for each of IBM's business segments (present your results). What patterns to you see? What are the implications of these patterns? Compute the year-to-year change in gross margin percentage, by quarter, for each of IBM's segments (present your results). What patterns to you see? What are the implications of these patterns? Which segment(s) are positively (negatively) inuencing IBM's recent performance? What are the implications of this? What does your analysis indicate regarding IBM's future performance? To facilitate your analysis, the data below are inserted into this document as an Excel Objects. STATEMENT OF FINANCIAL POSITION Fiscal Year 2016 5017 5018 5019 ASSETS Cash & Equivalents 8,527 12,580 12,222 9,009 Receivables . Total (Net) 29,245 eventories . Total 1,553 EBS'T 1,682 1.619 Current Assets . Other 4,563 3,942 4,208 3,997 Current Assets . Total 43,898 49,735 49,146 38,420 Plant, Property & Equip (Net) 10.830 11.116 10.792 10 010 Investments at Equity 90 192 2,074 Investments and Advances . Ott 9,471 10,052 9,541 8,712 Intangibles 10,887 40,530 19,353 73,456 Deferred Charges 4,761 6,480 7.342 Assets . Other 7,548 7,353 7,016 11,861 TOTAL ASSETS (17,470 125,356 CRE'EZE 152,186 LIABILITIES Accounts Payable 6,209 6,451 6,366 Notes Payable 1,274 1,77 Accrued Expense Taxes Payable 3,235 4,219 2,839 Debt (Long Term) Due In One Ye 6,239 5,214 7,051 Other Current Liabilities 19,318 19,706 18,416 19,789 otal Current Liabilities 16,275 37,363 38,227 TOZ'LE Long Term Debt 14,655 39.837 15,605 54.102 Deferred Taxes (Balance Sheet) 425 545 1.696 3,851 Liabilities . Other 29,886 28,925 TRY'RE TOTAL LIABILITIES 99,078 107,631 106,453 131,202 SHAREHOLDERS' EQUITY Common Stock Capital Surplus 53,490 54,120 54,704 $5,447 Retained Earnings (Net Other) 123,361 126,534 129,716 134,357 Less: Treasury Stock 159,050 163,506 168,071 169,413 Shareholders Equity - Parent 18,246 17,594 16. 796 20,841 Noncontrolling Interest . Nonrede 131 TOTAL SHAREHOLDERS EQUITY 18,392 17.725 16.929 20,985 INCOME ST. Fiscal Year: 2016 F2017 2018 2,019 Sales (Net) 79,920 79:139 79,591 27,147 Cost of Goods Sold 37,171 38,209 17,856 40,659 Gross Profit 42,749 40,930 41,735 16,484 Selling, General, & Admin Exper 26,360 25,476 24,294 20,604 Income Before Deprecia 16.389 15,454 15,884 Depreciation, Depletion, & Amp 4,381 4,541 Operating Income After Depreciat 12,008 10,913 12,961 Interest Expense 1.204 1,278 Non-Operating Income/Expense 1,522 1,709 (137 Special Items (16) 16483 Pretax Income 12,314 11,383 10,166 Income Taxes . Total 5,642 3.619 731 Minority Interest (17) (17) Incame Before FI&DO 11,881 5,758 8, 723 9,435 Discontinued Operations (5) Net Income (Less) 5,753 8, 728 9,431 Primary EPS 12,44 9.56 10.63 Shares for Primary EPS 55.423 932.828 12.048 187.235 Median Analyst Expectation 13,51 13.80 13.80 12.80 Business Segments Revenue Mar-10 sep 10 Dec-10 Mar-17 un- 1 Sep-10 Dec. Dec 19 Cloud & Cognitive Software 4,675 4,235 5,297 4,063 Global Business Services 4,255 4,191 4,606 4,13 4,070 4,243 Global Technology Services 8,424 8,748 9,308 8,216 8,40 7,321 7,101 7,299 6,837 6,949 Systems 1,675 1,950 1,558 2.530 1,395 1,747 ,721 ,177 1,736 1,621 1,328 1,753 1,481 3,042 Global Financing 410 424 412 447 405 394 388 353 301 Other 76 66 71 493 417 4,260 107 19,161 18,028 Total Revenue 18,684 20,238 19,226 21,770 18,155 19,153 18, 756 18,756 1,760 8,182 21,777 Gross Profit Margin Cloud & Cognitive Software 3,263 3,843 3,405 4,381 3,140 3,602 3,432 3,904 4,250 3,776 S,289 ERE'E 4,364 3,912 5,732 Global Business Services 1,066 1,119 1,207 1,109 1,020 1,117 1,071 1,32 1,187 1,079 1,080 1,280 1,167 Global Technology Services 3,445 3,685 3.674 3,993 3,196 3,413 3,476 419 2,432 3.627 2,547 2,317 2,352 2,399 2,446 958 1.102 1,440 663 921 922 856 1.102 915 1.331 938 779 1,704 174 164 156 167 129 128 108 105 102 113 123 127 107 Global Financing Other 4397 8.036 9.006 Total Gross Profit Margin 8.688 9.694 9,017 10.885 7,770 8. 796 10,866 8.239 8,628 10,684 8,329 11,106
