Merck & Company Inc (MRK)

Payables turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	28,124,000	29,523,000	31,360,000	25,611,000	29,810,000
Payables	US$ in thousands	4,079,000	3,922,000	4,264,000	4,609,000	4,327,000
Payables turnover		6.89	7.53	7.35	5.56	6.89

December 31, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $28,124,000K ÷ $4,079,000K
= 6.89

The payables turnover ratio for Merck & Company Inc, a pharmaceutical industry leader, has exhibited varying trends over the years. In December 2020, the ratio stood at 6.89, indicating that the company converted its accounts payable into purchases approximately 6.89 times during that year.

However, by December 2021, the payables turnover ratio decreased to 5.56, suggesting a slower rate of converting payables into purchases compared to the previous year. This could be influenced by changes in procurement practices or payment terms with suppliers.

Over the next two years, the ratio showed an upward trend, reaching 7.35 in December 2022 and further improving to 7.53 by December 2023. These increases indicate that Merck effectively managed its accounts payable, possibly negotiating better terms with suppliers or streamlining its payment processes.

Interestingly, by December 2024, the payables turnover ratio reverted to its initial level of 6.89. This fluctuation may reflect adjustments in the company's operations, acquisitions, or supplier relationships during that year.

Overall, the payables turnover ratio is a key metric for assessing a company's efficiency in managing its accounts payable. The fluctuations observed in Merck & Company Inc's payables turnover ratio over the years suggest dynamic changes in its working capital management and relationships with suppliers, which could impact its overall financial performance.