Intrinsic value of International Business Machines - IBM

Previous Close

$119.34

  Intrinsic Value

$173.71

stock screener

  Rating & Target

buy

+46%

Previous close

$119.34

 
Intrinsic value

$173.71

 
Up/down potential

+46%

 
Rating

buy

We calculate the intrinsic value of IBM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 108.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
Revenue, $m
  82,067
  85,210
  88,574
  92,163
  95,985
  100,047
  104,358
  108,928
  113,764
  118,880
  124,285
  129,992
  136,014
  142,365
  149,060
  156,114
  163,544
  171,367
  179,601
  188,265
  197,381
  206,969
  217,053
  227,655
  238,802
  250,519
  262,835
  275,778
  289,379
  303,671
Variable operating expenses, $m
  68,622
  71,095
  73,741
  76,565
  79,573
  82,769
  86,161
  89,756
  93,561
  97,586
  97,785
  102,276
  107,014
  112,011
  117,279
  122,829
  128,674
  134,829
  141,307
  148,125
  155,297
  162,841
  170,774
  179,116
  187,886
  197,105
  206,795
  216,978
  227,680
  238,924
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  68,622
  71,095
  73,741
  76,565
  79,573
  82,769
  86,161
  89,756
  93,561
  97,586
  97,785
  102,276
  107,014
  112,011
  117,279
  122,829
  128,674
  134,829
  141,307
  148,125
  155,297
  162,841
  170,774
  179,116
  187,886
  197,105
  206,795
  216,978
  227,680
  238,924
Operating income, $m
  13,445
  14,115
  14,832
  15,597
  16,412
  17,278
  18,198
  19,172
  20,203
  21,294
  26,499
  27,716
  29,000
  30,354
  31,782
  33,286
  34,870
  36,538
  38,293
  40,141
  42,084
  44,129
  46,279
  48,539
  50,916
  53,414
  56,040
  58,800
  61,700
  64,747
EBITDA, $m
  20,349
  21,128
  21,962
  22,852
  23,800
  24,807
  25,876
  27,009
  28,208
  29,476
  30,816
  32,232
  33,725
  35,300
  36,960
  38,709
  40,551
  42,490
  44,532
  46,680
  48,941
  51,318
  53,818
  56,447
  59,211
  62,116
  65,170
  68,379
  71,752
  75,295
Interest expense (income), $m
  1,158
  2,528
  2,749
  2,981
  3,228
  3,492
  3,774
  4,073
  4,390
  4,726
  5,082
  5,459
  5,856
  6,276
  6,720
  7,187
  7,680
  8,199
  8,746
  9,322
  9,928
  10,565
  11,236
  11,942
  12,684
  13,464
  14,285
  15,147
  16,053
  17,006
  18,007
Earnings before tax, $m
  10,916
  11,366
  11,851
  12,369
  12,920
  13,505
  14,125
  14,782
  15,477
  16,212
  21,041
  21,860
  22,724
  23,635
  24,595
  25,606
  26,671
  27,792
  28,972
  30,213
  31,519
  32,893
  34,337
  35,855
  37,452
  39,130
  40,893
  42,746
  44,694
  46,740
Tax expense, $m
  2,947
  3,069
  3,200
  3,340
  3,488
  3,646
  3,814
  3,991
  4,179
  4,377
  5,681
  5,902
  6,135
  6,381
  6,641
  6,914
  7,201
  7,504
  7,822
  8,158
  8,510
  8,881
  9,271
  9,681
  10,112
  10,565
  11,041
  11,541
  12,067
  12,620
Net income, $m
  7,969
  8,297
  8,652
  9,030
  9,432
  9,859
  10,311
  10,791
  11,298
  11,834
  15,360
  15,958
  16,588
  17,253
  17,954
  18,692
  19,470
  20,288
  21,149
  22,056
  23,009
  24,012
  25,066
  26,174
  27,340
  28,565
  29,852
  31,205
  32,626
  34,120

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  130,059
  135,040
  140,370
  146,058
  152,116
  158,554
  165,386
  172,627
  180,292
  188,399
  196,965
  206,009
  215,553
  225,619
  236,229
  247,408
  259,182
  271,580
  284,629
  298,360
  312,807
  328,002
  343,982
  360,785
  378,450
  397,019
  416,537
  437,049
  458,604
  481,253
Adjusted assets (=assets-cash), $m
  130,059
  135,040
  140,370
  146,058
  152,116
  158,554
  165,386
  172,627
  180,292
  188,399
  196,965
  206,009
  215,553
  225,619
  236,229
  247,408
  259,182
  271,580
  284,629
  298,360
  312,807
  328,002
  343,982
  360,785
  378,450
  397,019
  416,537
  437,049
  458,604
  481,253
Revenue / Adjusted assets
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
Average production assets, $m
  32,499
  33,743
  35,075
  36,496
  38,010
  39,619
  41,326
  43,135
  45,051
  47,076
  49,217
  51,477
  53,862
  56,377
  59,028
  61,821
  64,763
  67,861
  71,122
  74,553
  78,163
  81,960
  85,953
  90,152
  94,566
  99,206
  104,083
  109,208
  114,594
  120,254
Working capital, $m
  6,730
  6,987
  7,263
  7,557
  7,871
  8,204
  8,557
  8,932
  9,329
  9,748
  10,191
  10,659
  11,153
  11,674
  12,223
  12,801
  13,411
  14,052
  14,727
  15,438
  16,185
  16,971
  17,798
  18,668
  19,582
  20,543
  21,552
  22,614
  23,729
  24,901
Total debt, $m
  50,913
  55,197
  59,780
  64,672
  69,881
  75,418
  81,294
  87,521
  94,113
  101,085
  108,452
  116,230
  124,438
  133,094
  142,219
  151,833
  161,959
  172,620
  183,843
  195,652
  208,076
  221,144
  234,887
  249,337
  264,529
  280,499
  297,284
  314,924
  333,461
  352,940
Total liabilities, $m
  111,851
  116,135
  120,718
  125,610
  130,819
  136,356
  142,232
  148,459
  155,051
  162,023
  169,390
  177,168
  185,376
  194,032
  203,157
  212,771
  222,897
  233,558
  244,781
  256,590
  269,014
  282,082
  295,825
  310,275
  325,467
  341,437
  358,222
  375,862
  394,399
  413,878
Total equity, $m
  18,208
  18,906
  19,652
  20,448
  21,296
  22,198
  23,154
  24,168
  25,241
  26,376
  27,575
  28,841
  30,177
  31,587
  33,072
  34,637
  36,286
  38,021
  39,848
  41,770
  43,793
  45,920
  48,158
  50,510
  52,983
  55,583
  58,315
  61,187
  64,205
  67,375
Total liabilities and equity, $m
  130,059
  135,041
  140,370
  146,058
  152,115
  158,554
  165,386
  172,627
  180,292
  188,399
  196,965
  206,009
  215,553
  225,619
  236,229
  247,408
  259,183
  271,579
  284,629
  298,360
  312,807
  328,002
  343,983
  360,785
  378,450
  397,020
  416,537
  437,049
  458,604
  481,253
Debt-to-equity ratio
  2.800
  2.920
  3.040
  3.160
  3.280
  3.400
  3.510
  3.620
  3.730
  3.830
  3.930
  4.030
  4.120
  4.210
  4.300
  4.380
  4.460
  4.540
  4.610
  4.680
  4.750
  4.820
  4.880
  4.940
  4.990
  5.050
  5.100
  5.150
  5.190
  5.240
Adjusted equity ratio
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7,969
  8,297
  8,652
  9,030
  9,432
  9,859
  10,311
  10,791
  11,298
  11,834
  15,360
  15,958
  16,588
  17,253
  17,954
  18,692
  19,470
  20,288
  21,149
  22,056
  23,009
  24,012
  25,066
  26,174
  27,340
  28,565
  29,852
  31,205
  32,626
  34,120
Depreciation, amort., depletion, $m
  6,904
  7,013
  7,130
  7,254
  7,387
  7,528
  7,678
  7,837
  8,005
  8,183
  4,317
  4,516
  4,725
  4,945
  5,178
  5,423
  5,681
  5,953
  6,239
  6,540
  6,856
  7,189
  7,540
  7,908
  8,295
  8,702
  9,130
  9,580
  10,052
  10,549
Funds from operations, $m
  14,873
  15,310
  15,781
  16,284
  16,819
  17,387
  17,989
  18,628
  19,303
  20,017
  19,677
  20,473
  21,313
  22,199
  23,132
  24,115
  25,151
  26,241
  27,388
  28,595
  29,865
  31,201
  32,606
  34,082
  35,635
  37,267
  38,982
  40,784
  42,679
  44,669
Change in working capital, $m
  240
  258
  276
  294
  313
  333
  354
  375
  397
  419
  443
  468
  494
  521
  549
  578
  609
  641
  675
  711
  747
  786
  827
  869
  914
  961
  1,010
  1,061
  1,115
  1,172
Cash from operations, $m
  14,633
  15,052
  15,506
  15,990
  16,505
  17,054
  17,636
  18,253
  18,906
  19,598
  19,234
  20,005
  20,819
  21,678
  22,583
  23,537
  24,542
  25,599
  26,713
  27,885
  29,118
  30,415
  31,779
  33,213
  34,721
  36,306
  37,972
  39,723
  41,563
  43,497
Maintenance CAPEX, $m
  -2,748
  -2,851
  -2,960
  -3,077
  -3,201
  -3,334
  -3,475
  -3,625
  -3,784
  -3,952
  -4,130
  -4,317
  -4,516
  -4,725
  -4,945
  -5,178
  -5,423
  -5,681
  -5,953
  -6,239
  -6,540
  -6,856
  -7,189
  -7,540
  -7,908
  -8,295
  -8,702
  -9,130
  -9,580
  -10,052
New CAPEX, $m
  -1,171
  -1,245
  -1,332
  -1,421
  -1,514
  -1,609
  -1,707
  -1,809
  -1,915
  -2,026
  -2,140
  -2,260
  -2,385
  -2,515
  -2,651
  -2,793
  -2,942
  -3,098
  -3,261
  -3,431
  -3,610
  -3,797
  -3,993
  -4,199
  -4,414
  -4,640
  -4,877
  -5,125
  -5,386
  -5,660
Cash from investing activities, $m
  -3,919
  -4,096
  -4,292
  -4,498
  -4,715
  -4,943
  -5,182
  -5,434
  -5,699
  -5,978
  -6,270
  -6,577
  -6,901
  -7,240
  -7,596
  -7,971
  -8,365
  -8,779
  -9,214
  -9,670
  -10,150
  -10,653
  -11,182
  -11,739
  -12,322
  -12,935
  -13,579
  -14,255
  -14,966
  -15,712
Free cash flow, $m
  10,713
  10,957
  11,214
  11,492
  11,790
  12,111
  12,453
  12,819
  13,207
  13,620
  12,964
  13,428
  13,919
  14,438
  14,986
  15,566
  16,176
  16,821
  17,500
  18,215
  18,968
  19,761
  20,596
  21,475
  22,399
  23,371
  24,393
  25,468
  26,597
  27,785
Issuance/(repayment) of debt, $m
  4,089
  4,284
  4,584
  4,892
  5,209
  5,537
  5,876
  6,227
  6,592
  6,972
  7,367
  7,778
  8,208
  8,656
  9,125
  9,614
  10,126
  10,662
  11,222
  11,809
  12,424
  13,068
  13,743
  14,450
  15,192
  15,970
  16,785
  17,640
  18,537
  19,478
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4,089
  4,284
  4,584
  4,892
  5,209
  5,537
  5,876
  6,227
  6,592
  6,972
  7,367
  7,778
  8,208
  8,656
  9,125
  9,614
  10,126
  10,662
  11,222
  11,809
  12,424
  13,068
  13,743
  14,450
  15,192
  15,970
  16,785
  17,640
  18,537
  19,478
Total cash flow (excl. dividends), $m
  14,802
  15,241
  15,798
  16,383
  17,000
  17,648
  18,329
  19,046
  19,799
  20,592
  20,330
  21,206
  22,127
  23,094
  24,111
  25,180
  26,302
  27,482
  28,722
  30,024
  31,392
  32,829
  34,339
  35,925
  37,591
  39,340
  41,178
  43,108
  45,135
  47,264
Retained Cash Flow (-), $m
  -614
  -697
  -746
  -796
  -848
  -901
  -957
  -1,014
  -1,073
  -1,135
  -1,199
  -1,266
  -1,336
  -1,409
  -1,485
  -1,565
  -1,648
  -1,736
  -1,827
  -1,922
  -2,023
  -2,127
  -2,237
  -2,352
  -2,473
  -2,600
  -2,732
  -2,872
  -3,018
  -3,171
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  14,188
  14,543
  15,051
  15,587
  16,152
  16,746
  17,373
  18,032
  18,726
  19,457
  19,131
  19,940
  20,791
  21,685
  22,626
  23,615
  24,654
  25,747
  26,895
  28,102
  29,370
  30,702
  32,102
  33,573
  35,118
  36,741
  38,446
  40,236
  42,117
  44,093
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  13,410
  12,921
  12,497
  12,019
  11,489
  10,910
  10,287
  9,627
  8,935
  8,221
  7,087
  6,409
  5,734
  5,071
  4,430
  3,820
  3,249
  2,723
  2,246
  1,823
  1,454
  1,138
  873
  656
  483
  347
  243
  166
  111
  72
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

International Business Machines Corporation (IBM) is a technology company. The Company operates through five segments: Cognitive Solutions, Global Business Services (GBS), Technology Services & Cloud Platforms, Systems and Global Financing. The Cognitive Solutions segment delivers a spectrum of capabilities, from descriptive, predictive and prescriptive analytics to cognitive systems. Cognitive Solutions includes Watson, a cognitive computing platform that has the ability to interact in natural language, process big data, and learn from interactions with people and computers. The GBS segment provides clients with consulting, application management services and global process services. The Technology Services & Cloud Platforms segment provides information technology infrastructure services. The Systems segment provides clients with infrastructure technologies. The Global Financing segment includes client financing, commercial financing, and remanufacturing and remarketing.

FINANCIAL RATIOS  of  International Business Machines (IBM)

Valuation Ratios
P/E Ratio 9.5
Price to Sales 1.4
Price to Book 6.2
Price to Tangible Book
Price to Cash Flow 6.7
Price to Free Cash Flow 8.8
Growth Rates
Sales Growth Rate -2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 189.9%
Total Debt to Equity 231.1%
Interest Coverage 12
Management Effectiveness
Return On Assets 11.4%
Ret/ On Assets - 3 Yr. Avg. 11.4%
Return On Total Capital 20.7%
Ret/ On T. Cap. - 3 Yr. Avg. 22.1%
Return On Equity 73%
Return On Equity - 3 Yr. Avg. 81.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 47.9%
Gross Margin - 3 Yr. Avg. 49.2%
EBITDA Margin 22.4%
EBITDA Margin - 3 Yr. Avg. 25.1%
Operating Margin 15.4%
Oper. Margin - 3 Yr. Avg. 18.8%
Pre-Tax Margin 15.4%
Pre-Tax Margin - 3 Yr. Avg. 18.8%
Net Profit Margin 14.9%
Net Profit Margin - 3 Yr. Avg. 14.6%
Effective Tax Rate 3.6%
Eff/ Tax Rate - 3 Yr. Avg. 13.7%
Payout Ratio 44.3%

IBM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IBM stock intrinsic value calculation we used $79139 million for the last fiscal year's total revenue generated by International Business Machines. The default revenue input number comes from 0001 income statement of International Business Machines. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IBM stock valuation model: a) initial revenue growth rate of 3.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.8%, whose default value for IBM is calculated based on our internal credit rating of International Business Machines, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of International Business Machines.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IBM stock the variable cost ratio is equal to 83.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for IBM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for International Business Machines.

Corporate tax rate of 27% is the nominal tax rate for International Business Machines. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IBM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IBM are equal to 39.6%.

Life of production assets of 11.4 years is the average useful life of capital assets used in International Business Machines operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IBM is equal to 8.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $17594 million for International Business Machines - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 912.768 million for International Business Machines is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of International Business Machines at the current share price and the inputted number of shares is $108.9 billion.

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