Merck & Company Inc (MRK)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 106,675,000 | 109,160,000 | 105,694,000 | 91,588,000 | 84,397,000 |
| Total stockholders’ equity | US$ in thousands | 37,581,000 | 45,991,000 | 38,184,000 | 25,317,000 | 25,907,000 |
| Financial leverage ratio | 2.84 | 2.37 | 2.77 | 3.62 | 3.26 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $106,675,000K ÷ $37,581,000K
= 2.84
The financial leverage ratio for Merck & Co Inc has fluctuated over the past five years. As of December 31, 2023, the ratio stands at 2.84, reflecting an increase compared to the prior year. This indicates that the company is relying more on debt financing relative to equity to fund its operations, assets, and growth.
The ratio was lowest in 2022 at 2.37, suggesting a lower level of financial risk as the company utilized less debt in its capital structure. However, in 2020, the ratio spiked to 3.62, indicating a significant increase in the company's financial leverage, which could pose higher risk in terms of debt repayment obligations.
The trend over the past five years shows some volatility in the financial leverage ratio, with fluctuations in the levels of debt used by the company. Investors and creditors may need to closely monitor this ratio to assess the company's ability to manage its debt levels effectively and sustain financial stability.
Peer comparison
Dec 31, 2023