Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Merck & Co. Inc., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Federal	928)	2,265)	74)	962)	514)
Foreign	2,435)	1,164)	1,273)	1,362)	1,806)
State	48)	57)	(13)	53)	(77)
Current provision	3,411)	3,486)	1,334)	2,377)	2,243)
Federal	(1,559)	(1,510)	240)	(605)	(330)
Foreign	(233)	71)	(77)	(40)	(240)
State	(107)	(129)	24)	(23)	14)
Deferred provision	(1,899)	(1,568)	187)	(668)	(556)
Taxes on income from continuing operations	1,512)	1,918)	1,521)	1,709)	1,687)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Current provision	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Merck & Co. Inc. current provision increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Deferred provision	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Merck & Co. Inc. deferred provision decreased from 2021 to 2022 and from 2022 to 2023.
Taxes on income from continuing operations	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Merck & Co. Inc. taxes on income from continuing operations increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Merck & Co. Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
U.S. statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
Acquisition of Prometheus	113.30%	0.00%	0.00%	0.00%	0.00%
Acquisition of Imago	13.40%	0.00%	0.00%	0.00%	0.00%
Valuation allowances	3.70%	0.70%	0.70%	0.50%	1.00%
Acquisition-related costs, including amortization	2.20%	0.00%	0.10%	0.50%	0.80%
Restructuring	2.20%	0.10%	0.40%	1.20%	0.30%
Foreign earnings	-49.80%	-11.10%	-10.50%	-14.10%	-8.90%
GILTI and the foreign-derived intangible income deduction	-4.30%	2.80%	-0.50%	4.10%	2.90%
R&D tax credit	-11.30%	-0.70%	-0.80%	-1.30%	-1.00%
State taxes	-6.20%	-0.70%	0.00%	0.80%	0.00%
Inventory donations	-3.50%	-0.30%	-0.30%	0.00%	0.00%
Tax settlements	0.00%	-0.10%	-2.00%	-0.20%	-3.50%
Acquisition of Pandion	0.00%	0.00%	2.60%	0.00%	0.00%
Acquisition of VelosBio	0.00%	0.00%	0.00%	6.30%	0.00%
Acquisition of OncoImmune	0.00%	0.00%	0.00%	1.10%	0.00%
Acquisition of Peloton	0.00%	0.00%	0.00%	0.00%	1.80%
Other	-0.70%	0.00%	0.30%	-0.50%	-0.70%
Effective tax rate, before Tax Cuts and Jobs Act of 2017	80.00%	11.70%	11.00%	19.40%	13.70%
Tax Cuts and Jobs Act of 2017	0.00%	0.00%	0.00%	0.00%	1.00%
Effective tax rate	80.00%	11.70%	11.00%	19.40%	14.70%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Effective tax rate, before Tax Cuts and Jobs Act of 2017	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Merck & Co. Inc. effective tax rate, before Tax Cuts and Jobs Act of 2017 increased from 2021 to 2022 and from 2022 to 2023.

Merck & Co. Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Product intangibles and licenses	—)	—)	—)	141)	442)
R&D capitalization	2,099)	1,341)	—)	—)	—)
Inventory related	86)	43)	119)	43)	32)
Pensions and other postretirement benefits	323)	372)	487)	834)	785)
Compensation related	357)	335)	301)	252)	322)
Unrecognized tax benefits	147)	91)	75)	117)	109)
Net operating losses and other tax credit carryforwards	868)	912)	867)	794)	897)
Other	713)	511)	434)	808)	764)
Gross deferred income tax assets	4,593)	3,605)	2,283)	2,989)	3,351)
Valuation allowance	(656)	(599)	(287)	(433)	(1,100)
Deferred income tax assets	3,937)	3,006)	1,996)	2,556)	2,251)
Product intangibles and licenses	(1,308)	(2,575)	(2,933)	(1,250)	(1,778)
Inventory related	(370)	(423)	(370)	(335)	(354)
Accelerated depreciation	(626)	(657)	(589)	(588)	(594)
Equity investments	(73)	(92)	(335)	(175)	—)
Pensions and other postretirement benefits	(249)	(284)	(338)	(248)	(191)
Other	(214)	(267)	(180)	(81)	(84)
Deferred income tax liabilities	(2,840)	(4,298)	(4,745)	(2,677)	(3,001)
Net deferred income taxes	1,097)	(1,292)	(2,749)	(121)	(750)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Gross deferred income tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Merck & Co. Inc. gross deferred income tax assets increased from 2021 to 2022 and from 2022 to 2023.
Deferred income tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Merck & Co. Inc. deferred income tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred income taxes	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Merck & Co. Inc. net deferred income taxes increased from 2021 to 2022 and from 2022 to 2023.

Merck & Co. Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Deferred income tax assets (included in Other assets)	1,968)	503)	692)	894)	719)
	Deferred income tax liabilities	871)	1,795)	3,441)	1,015)	1,470)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Deferred income tax assets (included in Other assets)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Merck & Co. Inc. deferred income tax assets (included in Other assets) decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Deferred income tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Merck & Co. Inc. deferred income tax liabilities decreased from 2021 to 2022 and from 2022 to 2023.

Merck & Co. Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	106,675)	109,160)	105,694)	91,588)	84,397)
Less: Noncurrent deferred tax assets, net	1,968)	503)	692)	894)	719)
Total assets (adjusted)	104,707)	108,657)	105,002)	90,694)	83,678)
Adjustment to Total Liabilities
Total liabilities (as reported)	69,040)	63,102)	67,437)	66,184)	58,396)
Less: Noncurrent deferred tax liabilities, net	871)	1,795)	3,441)	1,015)	1,470)
Total liabilities (adjusted)	68,169)	61,307)	63,996)	65,169)	56,926)
Adjustment to Total Merck & Co., Inc. Stockholders’ Equity
Total Merck & Co., Inc. stockholders’ equity (as reported)	37,581)	45,991)	38,184)	25,317)	25,907)
Less: Net deferred tax assets (liabilities)	1,097)	(1,292)	(2,749)	(121)	(750)
Total Merck & Co., Inc. stockholders’ equity (adjusted)	36,484)	47,283)	40,933)	25,438)	26,657)
Adjustment to Net Income Attributable To Merck & Co., Inc.
Net income attributable to Merck & Co., Inc. (as reported)	365)	14,519)	13,049)	7,067)	9,843)
Add: Deferred income tax expense (benefit)	(1,899)	(1,568)	187)	(668)	(556)
Net income attributable to Merck & Co., Inc. (adjusted)	(1,534)	12,951)	13,236)	6,399)	9,287)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Merck & Co. Inc., Financial Data: Reported vs. Adjusted

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Merck & Co. Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net Profit Margin
Reported net profit margin	0.61%	24.49%	26.79%	14.72%	21.01%
Adjusted net profit margin	-2.55%	21.85%	27.18%	13.33%	19.83%
Total Asset Turnover
Reported total asset turnover	0.56	0.54	0.46	0.52	0.55
Adjusted total asset turnover	0.57	0.55	0.46	0.53	0.56
Financial Leverage
Reported financial leverage	2.84	2.37	2.77	3.62	3.26
Adjusted financial leverage	2.87	2.30	2.57	3.57	3.14
Return on Equity (ROE)
Reported ROE	0.97%	31.57%	34.17%	27.91%	37.99%
Adjusted ROE	-4.20%	27.39%	32.34%	25.16%	34.84%
Return on Assets (ROA)
Reported ROA	0.34%	13.30%	12.35%	7.72%	11.66%
Adjusted ROA	-1.47%	11.92%	12.61%	7.06%	11.10%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Merck & Co. Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Merck & Co. Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Merck & Co. Inc. adjusted financial leverage ratio decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Merck & Co. Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Merck & Co. Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Merck & Co. Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc.	365)	14,519)	13,049)	7,067)	9,843)
Sales	60,115)	59,283)	48,704)	47,994)	46,840)
Profitability Ratio
Net profit margin¹	0.61%	24.49%	26.79%	14.72%	21.01%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc.	(1,534)	12,951)	13,236)	6,399)	9,287)
Sales	60,115)	59,283)	48,704)	47,994)	46,840)
Profitability Ratio
Adjusted net profit margin²	-2.55%	21.85%	27.18%	13.33%	19.83%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Net profit margin = 100 × Net income attributable to Merck & Co., Inc. ÷ Sales
= 100 × 365 ÷ 60,115 = 0.61%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Sales
= 100 × -1,534 ÷ 60,115 = -2.55%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Merck & Co. Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Sales	60,115)	59,283)	48,704)	47,994)	46,840)
Total assets	106,675)	109,160)	105,694)	91,588)	84,397)
Activity Ratio
Total asset turnover¹	0.56	0.54	0.46	0.52	0.55
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Sales	60,115)	59,283)	48,704)	47,994)	46,840)
Adjusted total assets	104,707)	108,657)	105,002)	90,694)	83,678)
Activity Ratio
Adjusted total asset turnover²	0.57	0.55	0.46	0.53	0.56

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Sales ÷ Total assets
= 60,115 ÷ 106,675 = 0.56

² Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 60,115 ÷ 104,707 = 0.57

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Merck & Co. Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	106,675)	109,160)	105,694)	91,588)	84,397)
Total Merck & Co., Inc. stockholders’ equity	37,581)	45,991)	38,184)	25,317)	25,907)
Solvency Ratio
Financial leverage¹	2.84	2.37	2.77	3.62	3.26
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	104,707)	108,657)	105,002)	90,694)	83,678)
Adjusted total Merck & Co., Inc. stockholders’ equity	36,484)	47,283)	40,933)	25,438)	26,657)
Solvency Ratio
Adjusted financial leverage²	2.87	2.30	2.57	3.57	3.14

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total Merck & Co., Inc. stockholders’ equity
= 106,675 ÷ 37,581 = 2.84

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Merck & Co., Inc. stockholders’ equity
= 104,707 ÷ 36,484 = 2.87

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Merck & Co. Inc. adjusted financial leverage ratio decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc.	365)	14,519)	13,049)	7,067)	9,843)
Total Merck & Co., Inc. stockholders’ equity	37,581)	45,991)	38,184)	25,317)	25,907)
Profitability Ratio
ROE¹	0.97%	31.57%	34.17%	27.91%	37.99%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc.	(1,534)	12,951)	13,236)	6,399)	9,287)
Adjusted total Merck & Co., Inc. stockholders’ equity	36,484)	47,283)	40,933)	25,438)	26,657)
Profitability Ratio
Adjusted ROE²	-4.20%	27.39%	32.34%	25.16%	34.84%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income attributable to Merck & Co., Inc. ÷ Total Merck & Co., Inc. stockholders’ equity
= 100 × 365 ÷ 37,581 = 0.97%

² Adjusted ROE = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted total Merck & Co., Inc. stockholders’ equity
= 100 × -1,534 ÷ 36,484 = -4.20%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Merck & Co. Inc. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc.	365)	14,519)	13,049)	7,067)	9,843)
Total assets	106,675)	109,160)	105,694)	91,588)	84,397)
Profitability Ratio
ROA¹	0.34%	13.30%	12.35%	7.72%	11.66%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc.	(1,534)	12,951)	13,236)	6,399)	9,287)
Adjusted total assets	104,707)	108,657)	105,002)	90,694)	83,678)
Profitability Ratio
Adjusted ROA²	-1.47%	11.92%	12.61%	7.06%	11.10%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income attributable to Merck & Co., Inc. ÷ Total assets
= 100 × 365 ÷ 106,675 = 0.34%

² Adjusted ROA = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted total assets
= 100 × -1,534 ÷ 104,707 = -1.47%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Merck & Co. Inc. adjusted ROA deteriorated from 2021 to 2022 and from 2022 to 2023.

Merck & Co. Inc. (NYSE:MRK)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Merck & Co. Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Merck & Co. Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)