Merck & Company Inc (MRK)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 4,542,000 | 3,023,000 | 17,399,000 | 15,376,000 | 9,238,000 |
| Interest expense | US$ in thousands | 1,271,000 | 1,146,000 | 962,000 | 806,000 | 831,000 |
| Interest coverage | 3.57 | 2.64 | 18.09 | 19.08 | 11.12 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,542,000K ÷ $1,271,000K
= 3.57
The interest coverage ratio for Merck & Company Inc over the past five years has shown fluctuations. In December 2020, the interest coverage ratio was 11.12, indicating that the company generated operating income 11.12 times greater than its interest expenses. This ratio improved significantly in the following years, reaching 19.08 by December 2021 and 18.09 by December 2022.
However, there was a notable decline in the interest coverage ratio in December 2023, dropping to 2.64. This suggests that the company's ability to cover its interest expenses with operating income weakened substantially in that period. The ratio slightly recovered in December 2024 to 3.57 but still remained significantly lower compared to the previous years.
The trend in Merck & Company Inc's interest coverage ratio indicates varying levels of financial health and risk exposure in terms of managing interest obligations. It is important for investors and stakeholders to monitor this ratio closely to assess the company's ability to meet its debt obligations from operating profits.
Peer comparison
Dec 31, 2024