Merck & Company Inc (MRK)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.29 | 0.32 | 0.26 | 0.29 | 0.28 |
| Debt-to-capital ratio | 0.43 | 0.47 | 0.38 | 0.45 | 0.50 |
| Debt-to-equity ratio | 0.74 | 0.90 | 0.63 | 0.80 | 1.00 |
| Financial leverage ratio | 2.53 | 2.84 | 2.37 | 2.77 | 3.62 |
Merck & Company Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio shows the proportion of the company's assets financed by debt. The trend has been relatively stable, with a slight increase from 0.28 in 2020 to 0.29 in 2021 before decreasing to 0.26 in 2022 and then rising to 0.32 in 2023 and dropping again to 0.29 in 2024. This suggests that around 29% to 32% of Merck's assets are funded by debt over the years.
2. Debt-to-capital ratio: This ratio indicates the percentage of the company's capital that is financed by debt. The trend shows a decline from 0.50 in 2020 to 0.45 in 2021, and further decreases to 0.38 in 2022 before rising to 0.47 in 2023 and falling to 0.43 in 2024. This indicates a decreasing reliance on debt for capital funding from 2020 to 2024.
3. Debt-to-equity ratio: This ratio measures the company's financial leverage by comparing its total debt to shareholders' equity. The ratio has shown a downward trend from 1.00 in 2020 to 0.74 in 2024, suggesting a reduction in financial risk as the company has less debt relative to equity.
4. Financial leverage ratio: This ratio reflects the proportion of the company's assets that are financed by debt. The trend indicates a decline from 3.62 in 2020 to 2.53 in 2024, showing a decreasing reliance on debt to fund assets and indicating improved financial stability over the years.
Overall, the decreasing trends in the debt ratios and financial leverage ratio suggest that Merck & Company Inc has been managing its debt levels effectively, reducing its financial risk and enhancing its solvency position over the years, which is a positive indicator for investors and creditors.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 3.57 | 2.64 | 18.09 | 19.08 | 11.12 |
Based on the provided data, the interest coverage ratio for Merck & Company Inc has fluctuated over the years. In 2020, the interest coverage ratio was 11.12, indicating that the company's operating income was able to cover its interest expenses approximately 11 times.
The ratio improved significantly in 2021, reaching 19.08, suggesting a higher level of financial stability and ability to meet interest obligations. This positive trend continued in 2022 with an interest coverage ratio of 18.09, indicating continued strength in the company's ability to meet interest payments.
However, in 2023, there was a notable decline in the interest coverage ratio to 2.64, potentially signaling a decrease in the company's operating income relative to its interest expenses. This could raise concerns about the company's ability to comfortably meet its interest obligations.
The trend improved slightly in 2024, with an interest coverage ratio of 3.57, although it remains lower compared to the previous years. It would be important for stakeholders to monitor this ratio closely to ensure that the company's financial health is sustained and that it can comfortably meet its interest payments.