Merck & Company Inc (MRK)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 56.17% | 50.89% | 47.10% | 47.41% | 43.80% |
| Operating profit margin | 7.08% | -23.01% | 0.25% | -2.77% | -24.18% |
| Pretax margin | 31.04% | 3.12% | 27.73% | 29.92% | 20.25% |
| Net profit margin | 26.68% | 0.61% | 24.49% | 26.79% | 17.02% |
Based on the provided data for Merck & Company Inc, we can analyze the profitability ratios as follows:
1. Gross Profit Margin:
- The gross profit margin has shown a positive trend over the years, increasing from 43.80% in December 2020 to 56.17% in December 2024. This indicates that the company is effectively managing its production costs and generating more gross profit from its sales.
2. Operating Profit Margin:
- The operating profit margin has fluctuated during the period under review, with negative margins in 2020 and 2023, but improving to 7.08% in December 2024. The company seems to have implemented cost-cutting measures or improved operational efficiency to achieve a positive operating profit margin.
3. Pretax Margin:
- The pretax margin has varied significantly, ranging from 3.12% in December 2023 to 31.04% in December 2024, reflecting fluctuations in pre-tax profitability. The substantial increase in pretax margin in 2024 suggests improved profitability before accounting for taxes.
4. Net Profit Margin:
- The net profit margin shows a similar pattern to the pretax margin, with a significant increase in profitability from 0.61% in December 2023 to 26.68% in December 2024. This improvement indicates that the company has effectively managed its expenses and taxes to increase its bottom line profitability.
In conclusion, Merck & Company Inc has demonstrated an overall positive trend in profitability ratios, with improvements in gross profit margin, operating profit margin, pretax margin, and net profit margin over the years. These trends indicate that the company has been successful in optimizing its costs and enhancing its profitability.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.88% | -12.97% | 0.13% | -1.28% | -10.96% |
| Return on assets (ROA) | 14.62% | 0.34% | 13.30% | 12.35% | 7.72% |
| Return on total capital | 5.62% | 4.24% | 23.28% | 22.32% | 18.23% |
| Return on equity (ROE) | 36.96% | 0.97% | 31.57% | 34.17% | 27.91% |
Based on the provided data, we can analyze Merck & Company Inc's profitability ratios as follows:
1. Operating return on assets (Operating ROA):
- In 2020, the operating ROA was -10.96%, indicating that the company incurred operating losses relative to its assets.
- The operating ROA improved to -1.28% in 2021 and further increased to 0.13% in 2022, showing a positive trend in profitability.
- However, in 2023, the operating ROA declined significantly to -12.97%, reflecting a decrease in operating efficiency.
- By 2024, the operating ROA recovered to 3.88%, suggesting improved operational performance and efficiency.
2. Return on assets (ROA):
- ROA measures the overall profitability of the company relative to its total assets.
- Merck & Company Inc's ROA was 7.72% in 2020, indicating that the company generated a profit of 7.72 cents for every dollar of assets.
- The ROA increased to 12.35% in 2021, 13.30% in 2022, and peaked at 14.62% in 2024, demonstrating a positive trend in overall profitability.
- However, in 2023, the ROA dropped to 0.34%, which may suggest a temporary decrease in profitability.
3. Return on total capital:
- This ratio assesses the company's ability to generate profits from both debt and equity capital.
- Merck & Company Inc's return on total capital improved from 18.23% in 2020 to 22.32% in 2021 and further to 23.28% in 2022.
- However, in 2023 and 2024, the return on total capital decreased to 4.24% and 5.62%, respectively, indicating a decline in the efficiency of capital utilization.
4. Return on equity (ROE):
- ROE evaluates the company's profitability in relation to shareholder equity.
- Merck & Company Inc's ROE was 27.91% in 2020, increased to 34.17% in 2021, and slightly decreased to 31.57% in 2022.
- In 2023, the ROE sharply dropped to 0.97%, which may be a cause for concern.
- However, in 2024, the ROE rebounded to 36.96%, indicating improved profitability for shareholders.
Overall, while Merck & Company Inc showed fluctuations in its profitability ratios over the years, there is a general positive trend, with some periods of decline that need further analysis and attention.