Merck & Company Inc (MRK)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 4,542,000 | 3,023,000 | 17,399,000 | 15,376,000 | 9,238,000 |
| Long-term debt | US$ in thousands | 34,462,000 | 33,683,000 | 28,745,000 | 30,690,000 | 25,360,000 |
| Total stockholders’ equity | US$ in thousands | 46,313,000 | 37,581,000 | 45,991,000 | 38,184,000 | 25,317,000 |
| Return on total capital | 5.62% | 4.24% | 23.28% | 22.32% | 18.23% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $4,542,000K ÷ ($34,462,000K + $46,313,000K)
= 5.62%
Based on the data provided, Merck & Company Inc's return on total capital has shown fluctuations over the years. The return on total capital increased from 18.23% as of December 31, 2020, to 22.32% as of December 31, 2021, indicating improved efficiency in generating returns from the total capital employed. The trend continued to rise to 23.28% as of December 31, 2022, reflecting sustained performance.
However, there was a significant decline in the return on total capital in the following years, dropping to 4.24% as of December 31, 2023, and further decreasing to 5.62% as of December 31, 2024. This decline suggests a potential decrease in the company's ability to generate returns relative to the total capital invested, which may be attributed to various factors such as changes in the business environment or company-specific challenges.
Overall, it is essential for Merck & Company Inc to closely monitor and address the factors impacting its return on total capital to ensure sustained performance and efficiency in utilizing its capital resources.
Peer comparison
Dec 31, 2024