Export to Excel

Merck & Co. Inc. (MRK) | Analysis of Inventory

Inventory Accounting Policy

Inventories are valued at the lower of cost or market. The cost of a substantial majority of domestic pharmaceutical and vaccine inventories is determined using the last-in, first-out (“LIFO”) method for both financial reporting and tax purposes. The cost of all other inventories is determined using the first-in, first-out (“FIFO”) method. Inventories consist of currently marketed products and certain products awaiting regulatory approval. In evaluating the recoverability of inventories produced in preparation for product launches, Merck & Co. considers the probability that revenue will be obtained from the future sale of the related inventory together with the status of the product within the regulatory approval process.

Source: Merck & Co. Inc., Annual Report

Inventory Disclosure

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Merck & Co. Inc., Statement of Financial Position, Inventory

USD $ in millions

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
Finished goods
Raw materials and work in process
Supplies
Inventories, approximates current cost
Reduction to LIFO costs
Inventories
Less: Inventories recognized as other assets
Inventories (excludes inventories classified in other assets)

Source: Based on data from Merck & Co. Inc. Annual Reports

Item Description The company
Finished goods Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale. Merck & Co. Inc.'s finished goods increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
Raw materials and work in process The aggregate carrying amount as of the balance sheet date of items held by the entity which are partially completed at the time of measurement and unprocessed items that will go through the production process and become part of the final product. Includes supplies used directly or indirectly in the manufacturing or production process. This element may be used when the reporting entity combines work in process and raw materials into an aggregate amount. Merck & Co. Inc.'s raw materials and work in process increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
Supplies Carrying amount as of the balance sheet date of products used directly or indirectly in the manufacturing or production process, which may or may not become part of the final product. May also include items used in the storage, presentation or transportation of physical goods. Merck & Co. Inc.'s supplies increased from 2008 to 2009 but then slightly declined from 2009 to 2010.
Inventories (excludes inventories classified in other assets) Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). Merck & Co. Inc.'s inventories (excludes inventories classified in other assets) increased from 2008 to 2009 but then slightly declined from 2009 to 2010.

Adjustment to Inventory: from LIFO to FIFO

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  Adjustment to Inventories (excludes Inventories Classified In Other Assets)
Inventories (excludes inventories classified in other assets) at LIFO (as reported)
Add: LIFO reserve, ending balance
Inventories (excludes inventories classified in other assets) at FIFO (adjusted)
  Adjustment to Current Assets
Current assets (as reported)
Add: LIFO reserve, ending balance
Current assets (adjusted)
  Adjustment to Total Assets
Total assets (as reported)
Add: LIFO reserve, ending balance
Total assets (adjusted)
  Adjustment to Merck & Co., Inc. Stockholders’ Equity
Merck & Co., Inc. stockholders’ equity (as reported)
Add: LIFO reserve, ending balance
Merck & Co., Inc. stockholders’ equity (adjusted)
  Adjustment to Net Income Attributable To Merck & Co., Inc.
Net income attributable to Merck & Co., Inc. (as reported)
Add: Increase (decrease) in LIFO reserve, ending balance
Net income attributable to Merck & Co., Inc. (adjusted)

Merck & Co. Inc.'s inventory value on Dec 31, 2010 would be $6,054  (in millions) if the FIFO inventory method was used instead of LIFO. Merck & Co. Inc.'s inventories, valued on a LIFO basis, on Dec 31, 2010 were $5,868 . Merck & Co. Inc.'s inventories would have been $186  higher than reported on Dec 31, 2010 if the FIFO method had been used instead.

Adjusted Ratios: LIFO vs. FIFO (Summary)

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Merck & Co. Inc., adjusted ratios

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  Current Ratio
Reported current ratio (LIFO)
Adjusted current ratio (FIFO)
  Net Profit Margin
Reported net profit margin (LIFO) % % % % %
Adjusted net profit margin (FIFO) % % % % %
  Total Asset Turnover
Reported total asset turnover (LIFO)
Adjusted total asset turnover (FIFO)
  Financial Leverage
Reported financial leverage (LIFO)
Adjusted financial leverage (FIFO)
  Return on Equity (ROE)
Reported ROE (LIFO) % % % % %
Adjusted ROE (FIFO) % % % % %
  Return on Assets (ROA)
Reported ROA (LIFO) % % % % %
Adjusted ROA (FIFO) % % % % %
Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Merck & Co. Inc.'s adjusted current ratio improved from 2008 to 2009 and from 2009 to 2010.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Merck & Co. Inc.'s adjusted net profit margin improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Merck & Co. Inc.'s adjusted total asset turnover deteriorated from 2008 to 2009 but then improved from 2009 to 2010 not reaching 2008 level.
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.'s adjusted financial leverage declined from 2008 to 2009 but then slightly increased from 2009 to 2010.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. Merck & Co. Inc.'s adjusted ROE deteriorated from 2008 to 2009 and from 2009 to 2010.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Merck & Co. Inc.'s adjusted ROA deteriorated from 2008 to 2009 and from 2009 to 2010.

Adjusted Current Ratio

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Current assets (USD $ in millions)
Current liabilities (USD $ in millions)
   
Current ratio1
  Adjusted: from LIFO to FIFO
Adjusted current assets (USD $ in millions)
Current liabilities (USD $ in millions)
   
Adjusted current ratio2

2010 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Merck & Co. Inc.'s adjusted current ratio improved from 2008 to 2009 and from 2009 to 2010.

Adjusted Net Profit Margin

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Net income attributable to Merck & Co., Inc. (USD $ in millions)
Sales (USD $ in millions)
   
Net profit margin1 % % % % %
  Adjusted: from LIFO to FIFO
Adjusted net income attributable to Merck & Co., Inc. (USD $ in millions)
Sales (USD $ in millions)
   
Adjusted net profit margin2 % % % % %

2010 Calculations

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

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Sales
= 100 × ÷ = %

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Merck & Co. Inc.'s adjusted net profit margin improved from 2008 to 2009 but then deteriorated significantly from 2009 to 2010.

Adjusted Total Asset Turnover

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Sales (USD $ in millions)
Total assets (USD $ in millions)
   
Total asset turnover1
  Adjusted: from LIFO to FIFO
Sales (USD $ in millions)
Adjusted total assets (USD $ in millions)
   
Adjusted total asset turnover2

2010 Calculations

1 Total asset turnover = Sales ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= ÷ =

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Merck & Co. Inc.'s adjusted total asset turnover deteriorated from 2008 to 2009 but then improved from 2009 to 2010 not reaching 2008 level.

Adjusted Financial Leverage

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Total assets (USD $ in millions)
Merck & Co., Inc. stockholders’ equity (USD $ in millions)
   
Financial leverage1
  Adjusted: from LIFO to FIFO
Adjusted total assets (USD $ in millions)
Adjusted merck & Co., Inc. stockholders’ equity (USD $ in millions)
   
Adjusted financial leverage2

2010 Calculations

1 Financial leverage = Total assets ÷ Merck & Co., Inc. stockholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted merck & Co., Inc. stockholders’ equity
= ÷ =

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.'s adjusted financial leverage declined from 2008 to 2009 but then slightly increased from 2009 to 2010.

Adjusted Return On Equity (ROE)

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Net income attributable to Merck & Co., Inc. (USD $ in millions)
Merck & Co., Inc. stockholders’ equity (USD $ in millions)
   
ROE1 % % % % %
  Adjusted: from LIFO to FIFO
Adjusted net income attributable to Merck & Co., Inc. (USD $ in millions)
Adjusted merck & Co., Inc. stockholders’ equity (USD $ in millions)
   
Adjusted ROE2 % % % % %

2010 Calculations

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

2 Adjusted ROE = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted merck & Co., Inc. stockholders’ equity
= 100 × ÷ = %

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. Merck & Co. Inc.'s adjusted ROE deteriorated from 2008 to 2009 and from 2009 to 2010.

Adjusted Return On Assets (ROA)

You have visited 10 password protected pages for free. Others contain data covered by .

Sign Up Now to get full access to whole website and cut out all advertisements.

Export to Excel
    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Net income attributable to Merck & Co., Inc. (USD $ in millions)
Total assets (USD $ in millions)
   
ROA1 % % % % %
  Adjusted: from LIFO to FIFO
Adjusted net income attributable to Merck & Co., Inc. (USD $ in millions)
Adjusted total assets (USD $ in millions)
   
Adjusted ROA2 % % % % %

2010 Calculations

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

2 Adjusted ROA = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted total assets
= 100 × ÷ = %

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Merck & Co. Inc.'s adjusted ROA deteriorated from 2008 to 2009 and from 2009 to 2010.

February 7, 2012

Existing users sign in

Forgot your password?

Basic Materials

Consumer Goods

Consumer Services

Health Care

Industrials

Oil & Gas

Technology

Telecommunications