Stock Analysis on Net

International Business Machines Corp. (NYSE:IBM)

Enterprise Value to FCFF (EV/FCFF)

Microsoft Excel

Free Cash Flow to The Firm (FCFF)

International Business Machines Corp., FCFF calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to IBM 6,023 7,502 1,639 5,743 5,590
Net income attributable to noncontrolling interest 17 16 20 19 22
Net noncash charges 6,092 4,229 8,815 5,072 4,336
Changes in operating assets and liabilities, net of acquisitions/divestitures 1,313 2,184 (39) 1,962 8,249
Net cash provided by operating activities 13,445 13,931 10,435 12,796 18,197
Interest paid on debt, net of tax1 1,563 1,434 1,107 1,467 1,446
Interest capitalized, net of tax2 9 8 4 3 5
Payments for property, plant and equipment (1,048) (1,245) (1,346) (2,062) (2,618)
Proceeds from disposition of property, plant and equipment 557 321 111 387 188
Investment in software (637) (565) (626) (706) (612)
Free cash flow to the firm (FCFF) 13,889 13,884 9,685 11,885 16,605

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the International Business Machines Corp. suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. International Business Machines Corp. FCFF increased from 2022 to 2023 and from 2023 to 2024.

Interest Paid, Net of Tax

International Business Machines Corp., interest paid, net of tax calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Effective Income Tax Rate (EITR)
EITR1 21.00% 14.00% 21.00% 3.00% 21.00%
Interest Paid, Net of Tax
Interest paid on debt, before tax 1,978 1,668 1,401 1,512 1,830
Less: Interest paid on debt, tax2 415 234 294 45 384
Interest paid on debt, net of tax 1,563 1,434 1,107 1,467 1,446
Interest Costs Capitalized, Net of Tax
Interest capitalized, before tax 12 9 5 3 6
Less: Interest capitalized, tax3 3 1 1 1
Interest capitalized, net of tax 9 8 4 3 5

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 See details »

2 2024 Calculation
Interest paid on debt, tax = Interest paid on debt × EITR
= 1,978 × 21.00% = 415

3 2024 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 12 × 21.00% = 3


Enterprise Value to FCFF Ratio, Current

International Business Machines Corp., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Selected Financial Data (US$ in millions)
Enterprise value (EV) 268,556
Free cash flow to the firm (FCFF) 13,889
Valuation Ratio
EV/FCFF 19.34
Benchmarks
EV/FCFF, Competitors1
Accenture PLC 22.00
Adobe Inc. 20.85
Cadence Design Systems Inc. 62.26
CrowdStrike Holdings Inc. 80.43
Intuit Inc. 36.24
Microsoft Corp. 45.54
Oracle Corp. 32.23
Palantir Technologies Inc. 180.64
Palo Alto Networks Inc. 36.67
Salesforce Inc. 20.75
ServiceNow Inc. 48.98
Synopsys Inc. 50.57
Workday Inc. 26.33
EV/FCFF, Sector
Software & Services 38.15
EV/FCFF, Industry
Information Technology 41.30

Based on: 10-K (reporting date: 2024-12-31).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

International Business Machines Corp., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 279,256 211,965 159,474 155,684 155,259
Free cash flow to the firm (FCFF)2 13,889 13,884 9,685 11,885 16,605
Valuation Ratio
EV/FCFF3 20.11 15.27 16.47 13.10 9.35
Benchmarks
EV/FCFF, Competitors4
Accenture PLC 25.76 20.26 16.99 24.76 17.90
Adobe Inc. 21.98 37.75 20.82 33.61 40.43
Cadence Design Systems Inc. 61.26 63.83 44.54 35.05 44.13
CrowdStrike Holdings Inc. 81.46 38.65 96.35 141.44 807.14
Intuit Inc. 36.79 31.28 32.85 48.64 37.90
Microsoft Corp. 49.30 41.75 32.31 38.37 33.99
Oracle Corp. 31.24 35.83 31.60 16.36 14.99
Palantir Technologies Inc. 251.61 69.13 82.97 66.45
Palo Alto Networks Inc. 34.69 28.15 29.30 32.74 26.50
Salesforce Inc. 29.95 28.41 35.97 44.91 39.63
ServiceNow Inc. 60.21 56.55 40.86 60.13 83.74
Synopsys Inc. 56.23 55.87 30.82 38.59 42.88
Workday Inc. 32.57 33.40 45.74 57.52 72.44
EV/FCFF, Sector
Software & Services 41.22 35.76 29.84 32.54 28.11
EV/FCFF, Industry
Information Technology 40.33 34.40 26.74 27.56 23.97

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 See details »

2 See details »

3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 279,256 ÷ 13,889 = 20.11

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. International Business Machines Corp. EV/FCFF ratio decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.