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Is IBM’s $12 Billion Free Cash Flow Goal on Track?

Is IBM’s $12 Billion Free Cash Flow Goal on Track?

IBM (IBM) seems to be heading in the right direction to achieve its annual FCF (free cash flow) target of $12 billion. At the end of the second quarter, the company generated a FCF of $3.2 billion on a cumulative basis—compared to $3.6 billion in the same period last year. In 2017, IBM’s FCF was $13 billion. In the last five years, the company maintained an annual run rate of ~$13 billion. Based on IBM’s past historical trends, its FCF target of $12 billion in 2018 could be achieved. Even IBM’s capex-to-sales ratio is low at 4.3%.