Merck & Company Inc (MRK)

Working capital turnover

		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
Revenue (ttm)	US$ in thousands	64,168,000	63,174,000	62,479,000	61,402,000	60,114,000	59,314,000	58,311,000	57,869,000	59,283,000	58,974,000	57,169,000	53,978,000	48,704,000	46,131,000	43,906,000	41,857,000	43,287,000	36,488,000	37,956,000	40,363,000
Total current assets	US$ in thousands	38,782,000	40,361,000	38,205,000	31,445,000	32,168,000	31,954,000	29,977,000	33,402,000	35,722,000	33,561,000	32,116,000	31,184,000	30,266,000	31,058,000	28,665,000	26,909,000	27,764,000	26,577,000	29,343,000	26,174,000
Total current liabilities	US$ in thousands	28,420,000	29,586,000	26,060,000	25,099,000	25,694,000	23,094,000	23,394,000	23,131,000	24,239,000	22,998,000	23,168,000	22,316,000	23,872,000	23,728,000	21,906,000	26,361,000	27,327,000	20,405,000	22,178,000	23,483,000
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

December 31, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $64,168,000K ÷ ($38,782,000K – $28,420,000K)
= 6.19

Working capital turnover is a financial ratio that indicates how efficiently a company is using its working capital to generate revenue. In the case of Merck & Company Inc, the working capital turnover has fluctuated over the given period.

The working capital turnover for Merck & Company Inc was 15.00 as of March 31, 2020, indicating that the company generated $15 in revenue for every $1 of working capital invested. The ratio then dropped significantly to 5.30 by June 30, 2020, but gradually increased in the following quarters.

The ratio reached a peak of 99.05 by December 31, 2020, which suggests a substantial improvement in the company's efficiency in utilizing its working capital. This spike in the ratio may be attributed to various factors, such as effective management of inventory, accounts receivable, and accounts payable.

Subsequently, the working capital turnover ratio fluctuated over the next quarters, showing some volatility. As of December 31, 2024, the ratio stood at 6.19, indicating that the company generated $6.19 in revenue for every $1 of working capital invested.

Overall, the trend in Merck & Company Inc's working capital turnover ratio shows some variability, but, in general, a higher ratio indicates better efficiency in managing working capital to generate revenue. It is essential for the company to maintain a balance between working capital management and revenue generation to ensure sustained operational efficiency and financial health.