Merck & Company Inc (MRK)
Return on total capital
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,023,000 | 8,506,000 | 6,396,000 | 16,179,000 | 17,398,000 | 17,703,000 | 19,339,000 | 16,867,000 | 15,377,000 | 9,507,000 | 7,573,000 | 8,930,000 | 9,363,000 | 14,062,000 | 13,110,000 | 13,021,000 | 12,300,000 | 12,275,000 | 12,550,000 | 11,303,000 |
| Long-term debt | US$ in thousands | 33,683,000 | 33,972,000 | 34,072,000 | 28,074,000 | 28,745,000 | 28,482,000 | 28,684,000 | 30,586,000 | 30,690,000 | 22,907,000 | 24,033,000 | 24,002,000 | 25,360,000 | 26,321,000 | 26,156,000 | 21,637,000 | 22,736,000 | 22,677,000 | 22,771,000 | 22,721,000 |
| Total stockholders’ equity | US$ in thousands | 37,581,000 | 41,246,000 | 38,693,000 | 46,834,000 | 45,991,000 | 44,458,000 | 43,243,000 | 40,883,000 | 38,184,000 | 35,794,000 | 33,294,000 | 26,945,000 | 25,317,000 | 29,186,000 | 27,642,000 | 26,205,000 | 25,907,000 | 26,838,000 | 27,635,000 | 27,539,000 |
| Return on total capital | 4.24% | 11.31% | 8.79% | 21.60% | 23.28% | 24.27% | 26.89% | 23.60% | 22.33% | 16.20% | 13.21% | 17.53% | 18.48% | 25.33% | 24.37% | 27.22% | 25.29% | 24.79% | 24.90% | 22.49% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $3,023,000K ÷ ($33,683,000K + $37,581,000K)
= 4.24%
Return on total capital is a key financial ratio that indicates how effectively a company is utilizing its capital to generate profits. Looking at the trend of Merck & Co Inc's return on total capital over the past eight quarters, we observe fluctuations in the ratio.
In Q4 2023, the return on total capital dropped to 4.07%, significantly lower than the previous quarter. This may suggest a decline in the company's ability to generate profits relative to its total capital employed.
On the other hand, in Q1 2023, the return on total capital spiked to 22.14%, marking a substantial improvement from the previous quarter. This indicates a strong performance in generating profits relative to the total capital invested.
Overall, the company's return on total capital has exhibited variability over the recent quarters, which may be influenced by factors such as operational efficiency, capital structure, and investment decisions. Further analysis and comparison with industry peers could provide additional insights into Merck & Co Inc's performance in utilizing its capital effectively.
Peer comparison
Dec 31, 2023