Merck & Company Inc (MRK)
Solvency ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.29 | 0.30 | 0.31 | 0.29 | 0.32 | 0.32 | 0.33 | 0.26 | 0.26 | 0.27 | 0.27 | 0.29 | 0.29 | 0.25 | 0.27 | 0.26 | 0.28 | 0.29 | 0.29 | 0.25 |
| Debt-to-capital ratio | 0.43 | 0.44 | 0.44 | 0.44 | 0.47 | 0.45 | 0.47 | 0.37 | 0.38 | 0.39 | 0.40 | 0.43 | 0.45 | 0.39 | 0.42 | 0.47 | 0.50 | 0.47 | 0.49 | 0.45 |
| Debt-to-equity ratio | 0.74 | 0.79 | 0.80 | 0.77 | 0.90 | 0.82 | 0.88 | 0.60 | 0.63 | 0.64 | 0.66 | 0.75 | 0.80 | 0.64 | 0.72 | 0.89 | 1.00 | 0.90 | 0.95 | 0.83 |
| Financial leverage ratio | 2.53 | 2.64 | 2.58 | 2.62 | 2.84 | 2.59 | 2.70 | 2.30 | 2.37 | 2.41 | 2.48 | 2.61 | 2.77 | 2.61 | 2.72 | 3.37 | 3.62 | 3.08 | 3.28 | 3.24 |
The solvency ratios of Merck & Company Inc provide insights into the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. Over the period analyzed, the ratio fluctuated between 0.25 and 0.33, with a slight overall increase towards the end of the period. A lower ratio implies less reliance on debt for asset financing, which generally signals a stronger financial position.
2. Debt-to-capital ratio: This ratio measures the extent to which debt is used to finance the company's operations. The ratio ranged from 0.38 to 0.50 during the period, showing some variability but generally trending downwards towards the latter part of the period. A declining ratio suggests a decreasing reliance on debt for capital, which could lead to a more stable financial structure.
3. Debt-to-equity ratio: This ratio reflects the company's leverage and risk exposure. The ratio moved between 0.63 and 1.00 over the period, indicating fluctuations in the level of debt relative to equity. A lower ratio generally indicates lower financial risk as it suggests less dependence on debt for financing.
4. Financial leverage ratio: This ratio assesses the company's financial risk by examining the extent of debt in the company's capital structure. The ratio varied between 2.30 and 3.62, showing some volatility but generally trending downwards. A declining ratio implies reduced financial risk as the company relies less on debt for its operations.
Overall, the solvency ratios of Merck & Company Inc demonstrate fluctuations but with an overall trend towards lower levels of debt relative to assets, capital, equity, and financial leverage. This suggests an improving solvency position and potentially lower financial risk over the period analyzed.
Coverage ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense. For Merck & Company Inc, the interest coverage ratio has fluctuated over the past few years.
In March 2020, the interest coverage ratio was 14.55, indicating that the company earned 14.55 times the amount needed to cover its interest payments.
The ratio increased to 21.78 in June 2022, which suggests a substantial improvement in Merck's ability to cover its interest expenses.
However, the interest coverage ratio dropped to 2.64 in December 2023, indicating a significant decline in the company's ability to meet its interest obligations.
By March 2024, the ratio had increased to 4.23, showing some improvement compared to the previous period.
Overall, Merck & Company Inc's interest coverage ratio has exhibited volatility during the period under review, with both highs and lows. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's financial health and ability to meet its debt obligations.