Merck & Company Inc (MRK)

Days of sales outstanding (DSO)

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Receivables turnover		5.81	5.71	5.29	5.56	6.27	6.22	5.93	5.49	5.28	5.38	5.60	5.08	5.51	4.33	5.01	4.93	5.77	5.45	5.57	5.66
DSO	days	62.84	63.96	69.04	65.69	58.18	58.69	61.57	66.46	69.17	67.82	65.20	71.81	66.20	84.25	72.86	73.99	63.24	67.03	65.52	64.47

December 31, 2023 calculation

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

To analyze Merck & Co Inc's Days of Sales Outstanding (DSO) based on the provided data, we can see a trend over the past eight quarters. DSO represents the average number of days it takes for the company to collect revenue after making a sale.

From Q1 2022 to Q4 2023, we observe fluctuations in DSO with some variability. In Q1 2022, the DSO was relatively high at 68.30 days, indicating that it took the company an average of 68.30 days to collect its sales revenue. The DSO then decreased in Q2 2022 to 63.17 days but increased in Q3 2022 to 60.17 days.

The trend continued with a further decrease in Q4 2022 to 58.18 days, suggesting an improvement in the company's collection of sales revenue. However, in Q1 2023, there was an increase in DSO to 65.69 days, followed by another increase in Q2 2023 to 69.04 days. The trend then reversed with a decrease in Q3 2023 to 63.96 days and a further decrease in Q4 2023 to 62.84 days.

Overall, the fluctuating trend in DSO over the past eight quarters may indicate changes in the company's accounts receivable management efficiency. A decreasing trend in DSO generally signifies a faster collection of accounts receivable, which is a positive indicator of liquidity and effective credit policies. Conversely, an increasing trend in DSO could signal potential issues with collecting sales revenue promptly.

It is important for Merck & Co Inc to closely monitor its DSO trend and implement strategies to continually improve its accounts receivable management processes to ensure optimal cash flow and financial health.