Merck & Company Inc (MRK)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 3,023,000 | 17,399,000 | 15,376,000 | 9,238,000 | 12,301,000 |
| Interest expense | US$ in thousands | 1,146,000 | 962,000 | 806,000 | 831,000 | 893,000 |
| Interest coverage | 2.64 | 18.09 | 19.08 | 11.12 | 13.77 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,023,000K ÷ $1,146,000K
= 2.64
The interest coverage ratio for Merck & Co Inc has shown some fluctuations over the past five years. In 2020, the ratio was 10.99, indicating that the company generated enough operating income to cover its interest expenses almost 11 times. This improved significantly in 2021 to 17.14, and then further to 22.71 in 2022, reflecting a strengthening ability to cover interest payments. However, in 2023, the interest coverage ratio decreased to 3.78, suggesting a reduction in the company's ability to cover its interest expenses from operating income. Overall, while the company has demonstrated strong interest coverage in recent years, the sharp decline in 2023 may warrant further investigation into the factors influencing this decline and its potential impact on the company's financial health.
Peer comparison
Dec 31, 2023