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Analyzing Financial Statements

  • Date Submitted: 06/06/2012 08:38 PM
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Week Two Problems
FIN/571
April 4, 2012

Week Two Problems
In this paper the subject of discussion will be on the analysis and summary of the IBM’s financial rations calculations. The discussion will be on the liquidity, asset activity, leverage, coverage of fixed charges, profitability, and market value related rations at IBM (Emery, Finnerty, & Stowe, 2007).  
In the 1896 the Computing-Tabulating-Recording Company was responsible for the invention of the printing tabulator and later the first electric key punch device. In 1924, the Computing-Tabulating-Recording Company officially changed its name to the International Business Machines Corporation (IBM). In 1928, IBM introduced a new 80 column rectangular-hole punched card, which became the standard IBM card used by tabulators and computers for many years to come. Later in the 1950’s IBM became the primary contractor in developing computers for the United States Air Force automated defense systems. In July 1980, Microsoft’s Bill gates agreed to create an operating system for IBM's new computer for the home consumer, which IBM released on August 12 1981. The first IBM PC ran on a 4.77 MHz Intel 8088 microprocessor. IBM had now stepped into the home consumer market, sparking the computer revolution (Bellis, 2011).  
Liquidity
International Business Machine Corporation (IBM) liquidity position at the end of 2011 seems very competitive within the market. The liquidity of any company assets represents how quickly and easily they can be sold without losing any value (Emery, Finnerty, and Stowe, 2007). Liquidity ratios measure the company’s ability to meet its short-term obligations. The industry average current ratio is 1.3; IBM’s current ratio stayed at 1.2, which represents the company’s ability to cover its current liabilities. IBM’s current ratio is determined by taking $50,928,000,000, which are current assets and dividing them by $42,124,000,000, which represent the company’s current...

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