Please answer the 19 questions listed below. The questions below are based on the 2017 financial statements of IBM which I provided as a pdf. (Page number references below refer to document page numbers, not .pdf page numbers.) Please only use the financial statements provided to answer the following questions. There is no need to perform any IBM-related research beyond what is contained in the financial statements. Please use your own words to answer each question. DO NOT post excerpts from the financial statements as the answer to your questions. In all cases, when necessary, SHOW YOUR COMPUTATIONS!
1. Compute the gross profit margin for each of IBM’s revenue-producing activities (Services, Sales or Financing)?
2. In Note A on pages 84 through 87, IBM describes its revenue recognition policies. Briefly describe the dominant method of revenue recognition for Services, Sales and Financing. In your opinion, in which area does IBM have the most discretion? 3. Calculate IBM’s Altman’s Z-score. 4. How does IBM initially and subsequently recognize revenue from extended warranty arrangements? 5. Why amounts for research and development expensed instead of capitalized? 6. What is the source of the loss from discontinued operations? 7. Does IBM have a significant amount of potentially dilutive securities? Explain. 8. How much do customers owe IBM? Show your calculations. 9. What is the composition of IBM’s inventory? What inventory method does IBM use? 10. What is the average age of IBM’s property, plant and equipment as of the end of the latest fiscal year? 11. Does IBM have a deferred tax assets and/or liability? What would happen if the overall tax rate decreased? 12. On average, over what period does IBM amortize intangible assets? (Do not cite the range of years in the note, find a way to calculate.) 13. How much goodwill did IBM acquire in 2017? 14. Compute the weighted average interest rate IBM is paying on its long-term debt. 15. How many shares of common stock are outstanding? 16. Did IBM pay any dividends in 2017? If so, how much? What percentage of net income did IBM keep in 2017 (that is, not pay out in dividends)? 17. What is the average cost per share of treasury stock held as of December 31, 2017? Did IBM acquire additional treasury stock during 2017? What was the average price of the shares that were acquired? 18. Describe what “noncontrolling interest” means. 19. Summarize IBMs cash flows as presented on its statement of cash flows.
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