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I am reading this article: https://seekingalpha.com/article/4355058-ibm-underwhelming-turnaround-persists-and-gets-worse

I am reading the first points and when I get to "financial leases and receivables are deteriorating" I am struggling to understand the real meaning of these words.

I guess that means that IBM is not able to take more leases and receive more money from banks, but I am not sure. I am not native speaker so I will happy if someone can explain me the meaning here the same applies to "Balance sheet weakening on increased goodwill and financial leverage"

How the balance sheet will weaken on increase goodwill and financial leverage. increase goodwill means that good repution is increased so why the balanace sheet will weaken on increased goodwill?

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  • The income (related to these assets and debts owed) is deteriorating. Jun 23, 2020 at 10:46

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The term "deteriorating" means getting worse.

"Receivables" is money that is owed to IBM, and will be received by the company.

IBM provides computers and software to other companies for their information technology needs. Sometimes those are sold to other companies, but sometimes it leases them, that is, it provides them for as long as needed, and "finances", or provides loans to customers for the purchase or leasing of IT assets.

The sense of those two items is that IBM is getting less money from selling and from leasing IT resources to other companies, which is their business.

Financial leverage is money that IBM has borrowed. It shows up a a liability on their balance sheet. IBM must make payments on those loans, so that decreases their income and profitability.

"Goodwill" is shown as an asset on the balance sheet, but it actually represents money that IBM has paid for other companies that was greater than their value at the time of purchase.

Chron "What is goodwill?"

While it is shown as an asset, it doesn't produce income for IBM. If they have bought other companies and paid more for them than they were worth, and the companies purchased aren't adding to IBM's income, then those amounts shown as assets on the balance sheet aren't really very good.

Those two items indicate that IBM's balance sheet is not very good.

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