Merck & Company Inc (MRK)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Inventory turnover	4.60	4.60	4.45	4.48	4.64	4.79	4.91	4.98	5.15	5.29	5.26	4.79	4.46	5.40	5.50	4.75	5.36	4.27	4.54	4.80
Receivables turnover	6.24	5.55	5.37	5.40	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
Payables turnover	6.90	8.01	8.18	8.29	7.52	8.37	8.45	7.93	7.14	8.81	8.37	7.44	5.76	8.98	7.76	7.55	6.88	6.98	7.97	7.85
Working capital turnover	6.19	5.86	5.14	9.68	9.29	6.69	8.86	5.63	5.16	5.58	6.39	6.09	7.62	6.29	6.50	76.38	99.05	5.91	5.30	15.00

Based on the provided data for Merck & Company Inc activity ratios:

1. Inventory Turnover: The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times the inventory is sold and replaced over a period. Merck's inventory turnover ranged from 4.27 to 5.50 during the period, with an average of approximately 4.94. The company seems to effectively manage its inventory turnover, indicating efficient inventory control and good sales performance.

2. Receivables Turnover: The receivables turnover ratio reflects how well a company collects its outstanding accounts receivable during a specific period. Merck's receivables turnover varied from 4.33 to 6.27 over the period, with an average of around 5.54. The higher turnover indicates that Merck efficiently collects its outstanding receivables, reflecting effective credit and collection policies.

3. Payables Turnover: The payables turnover ratio signifies how many times a company pays off its accounts payable during a period. Merck's payables turnover ranged from 5.76 to 8.98, with an average of about 7.67. The company appears to manage its payables efficiently, paying its suppliers in a timely manner while maintaining good relationships.

4. Working Capital Turnover: The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales revenue. Merck's working capital turnover varied significantly from 5.16 to 99.05 during the period, with an average of approximately 15.12. The fluctuations suggest varying levels of working capital utilization efficiency, with particularly high turnover in December 2020.

Overall, Merck & Company Inc demonstrates sound management of its activity ratios, indicating effective utilization of resources and operational efficiency in inventory, receivables, payables, and working capital turnover.

Average number of days

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	79.28	79.36	82.05	81.55	78.64	76.17	74.39	73.36	70.85	69.01	69.33	76.22	81.90	67.65	66.34	76.77	68.08	85.57	80.45	76.08
Days of sales outstanding (DSO)	days	58.46	65.76	68.01	67.56	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
Number of days of payables	days	52.93	45.58	44.63	44.02	48.51	43.60	43.18	46.04	51.11	41.44	43.62	49.04	63.41	40.64	47.01	48.37	53.04	52.28	45.80	46.49

Based on the provided data for Merck & Company Inc, let's analyze the activity ratios:

1. Days of Inventory on Hand (DOH):
The average number of days Merck holds its inventory before selling it increased from 76.08 days in March 2020 to 79.28 days in December 2024. This indicates an upward trend in the amount of time it takes for the company to sell its inventory, which might imply inefficiencies in inventory management or changes in demand patterns.

2. Days of Sales Outstanding (DSO):
The DSO ratio for Merck decreased from 73.99 days in March 2020 to 58.46 days in December 2024. This downward trend reflects an improvement in the collection of accounts receivable and a more efficient cash conversion cycle for the company.

3. Number of Days of Payables:
The average number of days it takes for Merck to pay its suppliers increased from 46.49 days in March 2020 to 52.93 days in December 2024. This suggests that the company is taking longer to settle its payables over the years, potentially to manage cash flow or negotiate better payment terms with suppliers.

In conclusion, these activity ratios provide insights into Merck's operational efficiency, inventory management, and working capital management strategies over the analyzed period. The trends observed in these ratios can help stakeholders assess the company's financial health and performance in terms of managing its assets and liabilities.

Long-term

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Fixed asset turnover	2.70	2.69	2.69	2.66	2.61	2.63	2.62	2.66	2.77	2.89	2.85	2.73	2.53	2.48	2.43	2.29	2.55	2.16	2.40	2.64
Total asset turnover	0.55	0.54	0.55	0.58	0.56	0.56	0.56	0.54	0.54	0.55	0.53	0.51	0.46	0.49	0.48	0.46	0.47	0.41	0.42	0.48

The Fixed Asset Turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. For Merck & Company Inc, the ratio has shown a fluctuating trend over the years, starting at 2.64 in March 2020, declining to a low of 2.16 in September 2020, and then gradually increasing to 2.70 by December 2024. The company's fixed asset turnover ratio indicates an overall improvement in the efficiency of utilizing fixed assets to generate sales over the analyzed period.

The Total Asset Turnover ratio, on the other hand, measures how effectively a company is using its total assets to generate revenue. Merck & Company Inc's total asset turnover ratio has shown a relatively stable trend, starting at 0.48 in March 2020, fluctuating slightly between 0.41 and 0.55 over the analyzed period, and reaching 0.55 by December 2024. This indicates that the company has been able to generate more revenue relative to its total assets as the ratio increased over time.

In conclusion, both the Fixed Asset Turnover and Total Asset Turnover ratios for Merck & Company Inc show positive trends, with the company becoming more efficient in utilizing its assets to generate sales and revenue. This indicates good operational performance and effective asset management strategies by the company over the analyzed period.