Merck & Company Inc (MRK)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		5.81	6.27	5.28	5.29	5.77
DSO	days	62.84	58.18	69.17	69.02	63.24

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.81
= 62.84

The days of sales outstanding (DSO) for Merck & Co Inc have demonstrated some fluctuations over the past five years. In 2023, the DSO stands at 62.84 days, showing an increase compared to the previous year's 58.18 days. This indicates that on average, it takes Merck & Co Inc about 62.84 days to collect revenue from sales. The increase in DSO from 2022 to 2023 may suggest a potential delay in collecting accounts receivable, which could impact liquidity and cash flow management.

Comparing the DSO to earlier years, we see variations in performance. In 2021, the DSO was relatively high at 69.17 days, highlighting a longer collection period compared to recent years. However, there was a notable improvement in 2020, with the DSO dropping to 59.71 days. The lowest DSO in the provided years was in 2019, at 52.82 days, suggesting more efficient collections and a quicker conversion of sales into cash during that period.

It is essential for Merck & Co Inc to closely monitor and manage their DSO to ensure timely collection of accounts receivable and optimize cash flow. Analyzing trends in DSO can provide insights into the company's credit policies, customer payment behavior, and overall financial health.