Intrinsic value of International Business Machines Corporat - IBM

Previous Close

$140.33

  Intrinsic Value

$145.38

stock screener

  Rating & Target

hold

+4%

Previous close

$140.33

 
Intrinsic value

$145.38

 
Up/down potential

+4%

 
Rating

hold

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 124.9

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  81,183
  83,050
  85,184
  87,581
  90,236
  93,149
  96,321
  99,755
  103,455
  107,425
  111,673
  116,205
  121,031
  126,159
  131,602
  137,369
  143,474
  149,929
  156,751
  163,953
  171,553
  179,567
  188,015
  196,916
  206,291
  216,161
  226,550
  237,482
  248,983
  261,081
Variable operating expenses, $m
  68,764
  70,255
  71,960
  73,873
  75,994
  78,320
  80,853
  83,596
  86,550
  89,720
  89,177
  92,796
  96,650
  100,746
  105,091
  109,697
  114,572
  119,727
  125,175
  130,926
  136,995
  143,395
  150,141
  157,249
  164,735
  172,617
  180,913
  189,643
  198,828
  208,488
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
  68,764
  70,255
  71,960
  73,873
  75,994
  78,320
  80,853
  83,596
  86,550
  89,720
  89,177
  92,796
  96,650
  100,746
  105,091
  109,697
  114,572
  119,727
  125,175
  130,926
  136,995
  143,395
  150,141
  157,249
  164,735
  172,617
  180,913
  189,643
  198,828
  208,488
Operating income, $m
  12,418
  12,795
  13,225
  13,707
  14,242
  14,829
  15,468
  16,160
  16,905
  17,705
  22,496
  23,409
  24,381
  25,414
  26,510
  27,672
  28,902
  30,202
  31,576
  33,027
  34,558
  36,173
  37,874
  39,667
  41,556
  43,544
  45,637
  47,839
  50,156
  52,593
EBITDA, $m
  19,124
  19,564
  20,067
  20,631
  21,256
  21,943
  22,690
  23,499
  24,370
  25,306
  26,306
  27,374
  28,511
  29,719
  31,001
  32,359
  33,797
  35,318
  36,925
  38,622
  40,412
  42,300
  44,290
  46,387
  48,595
  50,920
  53,367
  55,943
  58,652
  61,502
Interest expense (income), $m
  1,158
  2,474
  2,591
  2,726
  2,880
  3,053
  3,245
  3,456
  3,686
  3,934
  4,202
  4,489
  4,796
  5,124
  5,473
  5,844
  6,238
  6,655
  7,096
  7,563
  8,057
  8,578
  9,127
  9,707
  10,318
  10,962
  11,640
  12,354
  13,106
  13,896
  14,728
Earnings before tax, $m
  9,945
  10,204
  10,499
  10,827
  11,189
  11,584
  12,012
  12,474
  12,971
  13,503
  18,007
  18,613
  19,257
  19,941
  20,666
  21,434
  22,247
  23,106
  24,013
  24,970
  25,980
  27,045
  28,167
  29,349
  30,594
  31,904
  33,283
  34,733
  36,259
  37,864
Tax expense, $m
  2,685
  2,755
  2,835
  2,923
  3,021
  3,128
  3,243
  3,368
  3,502
  3,646
  4,862
  5,025
  5,199
  5,384
  5,580
  5,787
  6,007
  6,239
  6,484
  6,742
  7,015
  7,302
  7,605
  7,924
  8,260
  8,614
  8,986
  9,378
  9,790
  10,223
Net income, $m
  7,260
  7,449
  7,664
  7,904
  8,168
  8,456
  8,769
  9,106
  9,469
  9,857
  13,145
  13,587
  14,058
  14,557
  15,086
  15,647
  16,240
  16,867
  17,529
  18,228
  18,966
  19,743
  20,562
  21,425
  22,333
  23,290
  24,296
  25,355
  26,469
  27,641

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
  125,865
  128,760
  132,069
  135,784
  139,901
  144,417
  149,336
  154,660
  160,395
  166,551
  173,136
  180,163
  187,645
  195,596
  204,033
  212,975
  222,440
  232,449
  243,025
  254,191
  265,973
  278,399
  291,496
  305,296
  319,830
  335,133
  351,240
  368,189
  386,021
  404,776
Adjusted assets (=assets-cash), $m
  125,865
  128,760
  132,069
  135,784
  139,901
  144,417
  149,336
  154,660
  160,395
  166,551
  173,136
  180,163
  187,645
  195,596
  204,033
  212,975
  222,440
  232,449
  243,025
  254,191
  265,973
  278,399
  291,496
  305,296
  319,830
  335,133
  351,240
  368,189
  386,021
  404,776
Revenue / Adjusted assets
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
  0.645
Average production assets, $m
  31,580
  32,306
  33,137
  34,069
  35,102
  36,235
  37,469
  38,805
  40,244
  41,788
  43,441
  45,204
  47,081
  49,076
  51,193
  53,436
  55,811
  58,323
  60,976
  63,778
  66,734
  69,852
  73,138
  76,600
  80,247
  84,087
  88,128
  92,381
  96,855
  101,560
Working capital, $m
  9,092
  9,302
  9,541
  9,809
  10,106
  10,433
  10,788
  11,173
  11,587
  12,032
  12,507
  13,015
  13,555
  14,130
  14,739
  15,385
  16,069
  16,792
  17,556
  18,363
  19,214
  20,112
  21,058
  22,055
  23,105
  24,210
  25,374
  26,598
  27,886
  29,241
Total debt, $m
  47,973
  50,474
  53,333
  56,543
  60,100
  64,002
  68,252
  72,852
  77,808
  83,126
  88,816
  94,887
  101,351
  108,221
  115,511
  123,236
  131,414
  140,062
  149,199
  158,847
  169,027
  179,763
  191,079
  203,002
  215,559
  228,781
  242,697
  257,342
  272,748
  288,953
Total liabilities, $m
  108,747
  111,248
  114,107
  117,317
  120,874
  124,776
  129,026
  133,626
  138,582
  143,900
  149,590
  155,661
  162,125
  168,995
  176,285
  184,010
  192,188
  200,836
  209,973
  219,621
  229,801
  240,537
  251,853
  263,776
  276,333
  289,555
  303,471
  318,116
  333,522
  349,727
Total equity, $m
  17,118
  17,511
  17,961
  18,467
  19,026
  19,641
  20,310
  21,034
  21,814
  22,651
  23,547
  24,502
  25,520
  26,601
  27,749
  28,965
  30,252
  31,613
  33,051
  34,570
  36,172
  37,862
  39,644
  41,520
  43,497
  45,578
  47,769
  50,074
  52,499
  55,050
Total liabilities and equity, $m
  125,865
  128,759
  132,068
  135,784
  139,900
  144,417
  149,336
  154,660
  160,396
  166,551
  173,137
  180,163
  187,645
  195,596
  204,034
  212,975
  222,440
  232,449
  243,024
  254,191
  265,973
  278,399
  291,497
  305,296
  319,830
  335,133
  351,240
  368,190
  386,021
  404,777
Debt-to-equity ratio
  2.800
  2.880
  2.970
  3.060
  3.160
  3.260
  3.360
  3.460
  3.570
  3.670
  3.770
  3.870
  3.970
  4.070
  4.160
  4.250
  4.340
  4.430
  4.510
  4.590
  4.670
  4.750
  4.820
  4.890
  4.960
  5.020
  5.080
  5.140
  5.200
  5.250
Adjusted equity ratio
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7,260
  7,449
  7,664
  7,904
  8,168
  8,456
  8,769
  9,106
  9,469
  9,857
  13,145
  13,587
  14,058
  14,557
  15,086
  15,647
  16,240
  16,867
  17,529
  18,228
  18,966
  19,743
  20,562
  21,425
  22,333
  23,290
  24,296
  25,355
  26,469
  27,641
Depreciation, amort., depletion, $m
  6,705
  6,769
  6,842
  6,924
  7,014
  7,114
  7,222
  7,339
  7,465
  7,601
  3,811
  3,965
  4,130
  4,305
  4,491
  4,687
  4,896
  5,116
  5,349
  5,595
  5,854
  6,127
  6,416
  6,719
  7,039
  7,376
  7,731
  8,104
  8,496
  8,909
Funds from operations, $m
  13,965
  14,218
  14,506
  14,828
  15,182
  15,570
  15,991
  16,445
  16,934
  17,458
  16,956
  17,552
  18,187
  18,862
  19,577
  20,334
  21,136
  21,983
  22,878
  23,823
  24,820
  25,870
  26,978
  28,144
  29,373
  30,666
  32,027
  33,459
  34,965
  36,550
Change in working capital, $m
  178
  209
  239
  268
  297
  326
  355
  385
  414
  445
  476
  508
  540
  574
  610
  646
  684
  723
  764
  807
  851
  898
  946
  997
  1,050
  1,105
  1,164
  1,224
  1,288
  1,355
Cash from operations, $m
  13,787
  14,009
  14,267
  14,559
  14,885
  15,243
  15,635
  16,061
  16,520
  17,014
  16,480
  17,045
  17,647
  18,287
  18,967
  19,689
  20,452
  21,260
  22,114
  23,016
  23,968
  24,973
  26,031
  27,147
  28,323
  29,560
  30,863
  32,235
  33,677
  35,195
Maintenance CAPEX, $m
  -2,713
  -2,770
  -2,834
  -2,907
  -2,988
  -3,079
  -3,179
  -3,287
  -3,404
  -3,530
  -3,666
  -3,811
  -3,965
  -4,130
  -4,305
  -4,491
  -4,687
  -4,896
  -5,116
  -5,349
  -5,595
  -5,854
  -6,127
  -6,416
  -6,719
  -7,039
  -7,376
  -7,731
  -8,104
  -8,496
New CAPEX, $m
  -656
  -726
  -830
  -932
  -1,033
  -1,133
  -1,234
  -1,336
  -1,439
  -1,544
  -1,652
  -1,763
  -1,877
  -1,995
  -2,117
  -2,243
  -2,375
  -2,511
  -2,654
  -2,802
  -2,956
  -3,118
  -3,286
  -3,462
  -3,647
  -3,840
  -4,041
  -4,253
  -4,474
  -4,706
Cash from investing activities, $m
  -3,369
  -3,496
  -3,664
  -3,839
  -4,021
  -4,212
  -4,413
  -4,623
  -4,843
  -5,074
  -5,318
  -5,574
  -5,842
  -6,125
  -6,422
  -6,734
  -7,062
  -7,407
  -7,770
  -8,151
  -8,551
  -8,972
  -9,413
  -9,878
  -10,366
  -10,879
  -11,417
  -11,984
  -12,578
  -13,202
Free cash flow, $m
  10,418
  10,512
  10,603
  10,720
  10,863
  11,031
  11,223
  11,438
  11,677
  11,939
  11,162
  11,471
  11,805
  12,162
  12,546
  12,955
  13,390
  13,853
  14,345
  14,866
  15,418
  16,001
  16,618
  17,269
  17,957
  18,682
  19,446
  20,251
  21,100
  21,993
Issuance/(repayment) of debt, $m
  2,161
  2,501
  2,859
  3,210
  3,557
  3,902
  4,249
  4,600
  4,956
  5,318
  5,690
  6,071
  6,464
  6,870
  7,290
  7,725
  8,178
  8,648
  9,137
  9,648
  10,180
  10,736
  11,316
  11,923
  12,558
  13,222
  13,916
  14,644
  15,406
  16,205
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  
  2,161
  2,501
  2,859
  3,210
  3,557
  3,902
  4,249
  4,600
  4,956
  5,318
  5,690
  6,071
  6,464
  6,870
  7,290
  7,725
  8,178
  8,648
  9,137
  9,648
  10,180
  10,736
  11,316
  11,923
  12,558
  13,222
  13,916
  14,644
  15,406
  16,205
Total cash flow (excl. dividends), $m
  12,580
  13,014
  13,462
  13,930
  14,420
  14,934
  15,472
  16,038
  16,632
  17,257
  16,852
  17,542
  18,269
  19,032
  19,835
  20,680
  21,568
  22,501
  23,482
  24,514
  25,598
  26,737
  27,934
  29,192
  30,514
  31,903
  33,362
  34,896
  36,506
  38,198
Retained Cash Flow (-), $m
  -322
  -394
  -450
  -505
  -560
  -614
  -669
  -724
  -780
  -837
  -896
  -956
  -1,018
  -1,081
  -1,147
  -1,216
  -1,287
  -1,361
  -1,438
  -1,519
  -1,602
  -1,690
  -1,781
  -1,877
  -1,977
  -2,081
  -2,191
  -2,305
  -2,425
  -2,551
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
  12,258
  12,620
  13,012
  13,425
  13,860
  14,319
  14,803
  15,314
  15,852
  16,420
  15,956
  16,587
  17,251
  17,951
  18,688
  19,464
  20,280
  21,140
  22,044
  22,995
  23,995
  25,047
  26,153
  27,315
  28,538
  29,822
  31,172
  32,590
  34,081
  35,647
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  11,553
  11,146
  10,704
  10,218
  9,693
  9,132
  8,541
  7,925
  7,291
  6,648
  5,628
  5,042
  4,466
  3,909
  3,379
  2,881
  2,422
  2,005
  1,633
  1,307
  1,028
  793
  599
  443
  320
  226
  156
  104
  68
  43
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 Corporat (IBM)

Valuation Ratios
P/E Ratio 11.2
Price to Sales 1.7
Price to Book 7.3
Price to Tangible Book
Price to Cash Flow 7.8
Price to Free Cash Flow 10.4
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 $79591 million for the last fiscal year's total revenue generated by International Business Machines Corporat. The default revenue input number comes from 0001 income statement of International Business Machines Corporat. 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 2% 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 6.1%, whose default value for IBM is calculated based on our internal credit rating of International Business Machines Corporat, 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 Corporat.
    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 84.8%.

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 Corporat.

Corporate tax rate of 27% is the nominal tax rate for International Business Machines Corporat. 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 38.9%.

Life of production assets of 11.4 years is the average useful life of capital assets used in International Business Machines Corporat 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 11.2%. 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 - $16796 million for International Business Machines Corporat - 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 889.837 million for International Business Machines Corporat 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 Corporat at the current share price and the inputted number of shares is $124.9 billion.

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