Merck & Company Inc (MRK)
Solvency ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 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 | 0.27 | 0.27 | 0.27 | 0.28 |
| Debt-to-capital ratio | 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 | 0.47 | 0.46 | 0.45 | 0.45 |
| Debt-to-equity ratio | 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 | 0.88 | 0.84 | 0.82 | 0.83 |
| Financial leverage ratio | 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 | 3.26 | 3.10 | 3.04 | 2.99 |
The solvency ratios of Merck & Co Inc provide insights into the company's ability to meet its long-term financial obligations.
- Debt-to-assets ratio remained relatively stable around 0.30 over the past quarters, indicating that approximately 30% of the company's assets are funded by debt on average.
- Debt-to-capital ratio fluctuated within a narrow range, suggesting that debt constitutes around 45% of the company's capital structure, with the remaining portion being equity.
- Debt-to-equity ratio showed variability, rising from 0.66 to 0.93, implying that the company has been relying more on debt financing in recent quarters compared to shareholder equity.
- Financial leverage ratio increased steadily from 2.30 to 2.84, indicating that the company's reliance on debt to finance its operations has been growing, thereby potentially increasing financial risk.
Overall, the solvency ratios of Merck & Co Inc highlight a stable financial position with manageable debt levels, but the increasing trend in some ratios warrants close monitoring of the company's debt management strategy to ensure long-term financial sustainability.
Coverage ratios
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Based on the data provided for Merck & Co Inc from Q4 2022 to Q4 2023, we observe fluctuations in the interest coverage ratio. In Q4 2023, the interest coverage ratio was 3.78, indicating that the company generated operating income 3.78 times larger than its interest expenses, which may raise concerns about its ability to cover interest payments adequately.
However, in the previous quarters, particularly Q3 2023, Q2 2023, and Q1 2023, the interest coverage ratios were significantly higher at 13.95, 11.49, and 24.57, respectively. These higher ratios suggest that Merck & Co Inc had substantial operating income relative to its interest expenses during those periods, reflecting a stronger capacity to meet its financial obligations.
Looking further back, we see relatively stable and robust interest coverage ratios in Q4 2022, Q3 2022, Q2 2022, and Q1 2022, ranging from 17.41 to 22.71. These consistently high ratios indicate that Merck & Co Inc had a consistently strong ability to cover its interest expenses with an ample amount of operating income during that time frame.
In conclusion, although the interest coverage ratio for Q4 2023 was lower compared to previous quarters, the historical data suggests that Merck & Co Inc generally maintained a solid financial position in terms of covering its interest obligations. However, it is important for investors and analysts to monitor future financial performance to ensure the company's continued ability to meet its interest payments.