Merck & Company Inc (MRK)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.32 | 0.26 | 0.29 | 0.28 | 0.27 |
| Debt-to-capital ratio | 0.47 | 0.38 | 0.45 | 0.50 | 0.47 |
| Debt-to-equity ratio | 0.90 | 0.63 | 0.80 | 1.00 | 0.88 |
| Financial leverage ratio | 2.84 | 2.37 | 2.77 | 3.62 | 3.26 |
The solvency ratios of Merck & Co Inc depict the company's ability to meet its long-term financial obligations. Looking at the trend over the past five years, we can observe fluctuations in the ratios.
The debt-to-assets ratio has been relatively stable, hovering around 0.30. This indicates that around 30% of the company's total assets have been financed through debt, with the rest funded by equity. A lower debt-to-assets ratio suggests a lower financial risk as it shows that the company relies less on debt financing.
The debt-to-capital ratio has exhibited some variability, but generally trending upwards. This ratio shows the proportion of the company's capital that is financed through debt. The increase in this ratio over time implies a higher reliance on debt to fund operations and investments.
The debt-to-equity ratio has seen significant fluctuations, from 0.67 in 2022 to 1.26 in 2020, before decreasing to 0.93 in 2023. A higher debt-to-equity ratio indicates higher financial risk and leverage, as it shows that the company has a larger proportion of debt relative to equity in its capital structure.
The financial leverage ratio, which indicates the proportion of assets financed through debt, has also shown varying trends. This ratio peaked in 2020 at 3.62 before decreasing in the following years. A higher financial leverage ratio implies a greater reliance on debt financing and increased financial risk.
Overall, the solvency ratios suggest that Merck & Co Inc has been managing its debt levels and capital structure over the years, although some fluctuations indicate changing financial leverage positions. Investors and stakeholders may need to closely monitor these ratios to assess the company's solvency and financial health.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.64 | 18.09 | 19.08 | 11.12 | 13.77 |
The interest coverage ratio for Merck & Co Inc has shown variability over the past five years. In 2023, the interest coverage ratio was 3.78, indicating that the company generated enough operating income to cover its interest expense approximately 3.78 times. This decline from the previous year's ratio of 22.71 suggests a decrease in the company's ability to cover its interest payments from its operating income. However, it is important to note that a ratio above 1 signifies that the company is generating enough earnings to cover its interest obligations.
The significant fluctuations in the interest coverage ratio over the years may be attributed to changes in the company's operating income, interest expenses, or a combination of both. It is essential for investors and creditors to closely monitor this ratio to assess the company's ability to meet its debt obligations and to make informed decisions regarding the company's financial health and risk potential.