Merck & Company Inc (MRK)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 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 | 12,300,000 | 12,275,000 | 12,550,000 | 11,303,000 |
| Interest expense (ttm) | US$ in thousands | 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 | 892,000 | 876,000 | 835,000 | 796,000 |
| Interest coverage | 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 | 13.79 | 14.01 | 15.03 | 14.20 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,023,000K ÷ $1,146,000K
= 2.64
The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.
Analyzing the interest coverage ratio of Merck & Co Inc over the past eight quarters reveals fluctuations in its ability to cover interest expenses. In Q4 2023, the interest coverage ratio was 3.78, indicating that the company earned $3.78 for every $1 of interest expense. This ratio increased significantly in Q3 2023 to 13.95, reflecting a substantial improvement in the company's ability to cover interest costs.
The interest coverage ratio remained relatively strong in Q2 2023 at 11.49 and further improved in Q1 2023 to 24.57, suggesting a more than sufficient capacity to meet interest obligations. Comparing these figures to the previous quarters, there is a notable increase from Q4 2022 (22.71), Q3 2022 (17.55), Q2 2022 (20.06), and Q1 2022 (17.41), indicating a positive trend in Merck & Co Inc's ability to cover interest expenses.
Overall, the data suggests that Merck & Co Inc has generally shown an upward trend in its interest coverage ratio, indicating a strengthening financial position and improved ability to handle interest payments. However, it is essential for investors and stakeholders to closely monitor this ratio to ensure the company maintains its ability to service its debt obligations effectively.
Peer comparison
Dec 31, 2023