Merck & Company Inc (MRK)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 7,315,000 | 8,918,000 | 13,552,000 | 5,103,000 | 3,023,000 | 8,506,000 | 6,396,000 | 16,179,000 | 17,398,000 | 17,703,000 | 19,339,000 | 16,867,000 | 15,377,000 | 9,507,000 | 7,573,000 | 8,930,000 | 9,363,000 | 14,062,000 | 13,110,000 | 13,021,000 |
| Interest expense (ttm) | US$ in thousands | 1,886,000 | 1,253,000 | 1,240,000 | 1,207,000 | 1,146,000 | 1,071,000 | 998,000 | 961,000 | 962,000 | 936,000 | 888,000 | 850,000 | 807,000 | 805,000 | 812,000 | 819,000 | 831,000 | 843,000 | 871,000 | 895,000 |
| Interest coverage | 3.88 | 7.12 | 10.93 | 4.23 | 2.64 | 7.94 | 6.41 | 16.84 | 18.09 | 18.91 | 21.78 | 19.84 | 19.05 | 11.81 | 9.33 | 10.90 | 11.27 | 16.68 | 15.05 | 14.55 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $7,315,000K ÷ $1,886,000K
= 3.88
The interest coverage ratio of Merck & Company Inc has exhibited some fluctuations over the period from March 31, 2020, to December 31, 2024. The ratio started at 14.55 in March 2020, indicating that the company generated 14.55 times more earnings before interest and taxes (EBIT) than the interest expense it incurred during that period.
The ratio showed an increasing trend through June 2021, peaking at 21.78 in June 2022, suggesting the company's ability to comfortably meet its interest obligations from its operating earnings. However, the ratio declined thereafter, reaching a low of 2.64 in December 2023, which could be a cause for concern as it indicates the company's EBIT may not be sufficient to cover its interest payments adequately.
Following this decline, the interest coverage ratio showed some improvement in the subsequent periods, settling at 7.12 in September 30, 2024. This indicates that the company's earnings were 7.12 times greater than its interest expenses during that quarter.
Overall, while the interest coverage ratio of Merck & Company Inc has shown some volatility over the analyzed period, it is essential for stakeholders to monitor this ratio closely to ensure the company's ability to meet its interest obligations and avoid potential financial distress.
Peer comparison
Dec 31, 2024