Financial Analysis of IBM Company

Financial Analysis of IBM Company

Introduction

IBM (International Business Machines Corporation) a well known informational technology company of United States of America, which is operating since more than 200 years. Currently its headquarters is located in Armonk, further, IBM is well known for providing excellent customer solution using innovative information technology. IBM is operating in the IT industry of USA, and is considered as a market leader of that industry (Anderson et al, 2011). According to its mission and vision, this company is working in single industry but has divided its operation into several segments which includes services in the field of technology, hardware products, computer technologies, personal system groups and various others.

IBM through its long term service has created a long pool of customers, and aims to provide them quality services in all the business the company operates in. However, despite of its large national market, the company major focus is its international market that it hopes to expand it in further locations. Although, the company operates in several business activities, but some of the major services that it provides to its customer include, new personal computers with unique features, servers, different times of workstations, provides services to its customers in various business activities, and networking. IBM is facing intense competition from all the major companies of the IT industry, but some of the closest competitors are Apple Inc, BMC software Inc, Dell Inc and others (Orlitzky et al, 2003).

Discussion

Analysis of IBM financial operations

International business machines corporation of the USA has perform exceptionally well over the years, and because of their unique qualities, innovative products, and customer focus attitude the company has achieved tremendous growth, and has become a role model for the young generation. In order, to get detailed analyses of company's growth we have analyzed the financial data of three years which include its balance sheet, Income Statements, and Ratio, and has also analyzed various forms of liquidity risk that company might be facing in contrast of its competitors (Friedlob & Schleifer, 2003).

Horizontal analysis and its meaning

Analyzing a financial performance of the company require proper understanding of financial laws, its principles, and proper knowledge of its trends. Analysts normally use horizontal or vertical analysis technique, and financial ratios to analyze the financial performance of the company. However, in this report we will use horizontal analyzing technique for IBM company, this technique is useful in understanding the techniques that were used by the accountant for the formation of financial statement, further, this techniques is used to compare financial performance for a particular time period for example of two years, three years, etc. in addition to this, this analysis technique is extremely helpful for managers in identifying the factors that are affecting the performance of the company.

Historical Analysis of Income Statement

According to the concept of horizontal analysis, three years income statement of the company for the period of 2009-2011 has been analyzed. IBM has increased its revenue during the three year period from 95758 in 2009, $99871 ...