IBM - IBM FINANCIAL ANALYSIS Earnings per Share 1 of 6...

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IBM FINANCIAL ANALYSIS Earnings per Share issue in shares ordinary of Number rs shareholde ordinary to le attributab ofit share per Earnings Pr = options share ding Outs shares of no average Weighted rs shareholde ordinary to le attributab ofit share per Earnings Diluted tan . Pr + = The Basic and Diluted earnings per share of International Business Machines Corporation (IBM) where $4.96 and $4.87 in 2005 and Intel basic and diluted earnings per share in the same financial year amounted to $1.42 and $1.40. The earnings per share figure comprise an important investment ratio. It shows the earning that the investor is obtained from the common stock held. Higher earnings per share figure indicate that the market value of the share price and the dividends are better. IBM holds a significantly higher earning per share figure when compared to Intel, which can be primarily due to higher profits and share repurchase activities. Intangibles An intangible asset is a non-monetary resource without physical substance that is utilized in deriving economic benefits to the company. Intangible assets identified in IBM 2005 annual report are goodwill, capitalized software, client related, completed technology, strategic alliances, patents and currency translation methodologies. Amortization in the income statement had been carried for all intangible assets, whilst additions arose for Goodwill in Global Services, Systems and Technology Group and Software arose during the year increasing the asset value in the balance sheet. Research and development are an important activity that a company in this industry should entail in order to survive in the market. Pure research, which cannot be 1 of 6
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IBM FINANCIAL ANALYSIS capitalized is written off in the income statement and is therefore deducting from net income. Development costs can be capitalized provided they meet certain criteria, but are also amortized against profits in due time. They will thus reduce the retained
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This note was uploaded on 03/02/2011 for the course BUS 500 taught by Professor Dr.spitz during the Spring '11 term at Deep Springs.

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IBM - IBM FINANCIAL ANALYSIS Earnings per Share 1 of 6...

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