Stock Analysis on Net
Stock Analysis on Net

Merck & Co. Inc. (NYSE:MRK)

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Goodwill and Intangible Asset Disclosure

Merck & Co. Inc., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Goodwill 21,197 21,204 21,264 20,238 19,425
Product rights 23,643 23,555 23,671 45,087 45,947
IPR&D 6,816 7,661 9,281 3,228 1,032
Trade names 2,881 2,879 2,882 2,882 2,899
Licenses and other 8,263 7,651 6,604 6,400 5,446
Other acquired intangibles, gross carrying amount 41,603 41,746 42,438 57,597 55,324
Accumulated amortization (23,592) (21,477) (19,505) (42,993) (41,128)
Other acquired intangibles, net 18,011 20,269 22,933 14,604 14,196
Goodwill and other intangibles 39,208 41,473 44,197 34,842 33,621

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).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Merck & Co. Inc. goodwill decreased from 2021 to 2022 and from 2022 to 2023.
Other acquired intangibles, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Merck & Co. Inc. other acquired intangibles, net decreased from 2021 to 2022 and from 2022 to 2023.
Goodwill and other intangibles Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Merck & Co. Inc. goodwill and other intangibles decreased from 2021 to 2022 and from 2022 to 2023.

Adjustments to Financial Statements: Removal of Goodwill

Merck & Co. Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
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: Goodwill 21,197 21,204 21,264 20,238 19,425
Total assets (adjusted) 85,478 87,956 84,430 71,350 64,972
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: Goodwill 21,197 21,204 21,264 20,238 19,425
Total Merck & Co., Inc. stockholders’ equity (adjusted) 16,384 24,787 16,920 5,079 6,482
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: Goodwill impairments — — — — 162
Net income attributable to Merck & Co., Inc. (adjusted) 365 14,519 13,049 7,067 10,005

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

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Merck & Co. Inc., adjusted financial ratios

Microsoft Excel
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 0.61% 24.49% 26.79% 14.72% 21.36%
Total Asset Turnover
Reported total asset turnover 0.56 0.54 0.46 0.52 0.55
Adjusted total asset turnover 0.70 0.67 0.58 0.67 0.72
Financial Leverage
Reported financial leverage 2.84 2.37 2.77 3.62 3.26
Adjusted financial leverage 5.22 3.55 4.99 14.05 10.02
Return on Equity (ROE)
Reported ROE 0.97% 31.57% 34.17% 27.91% 37.99%
Adjusted ROE 2.23% 58.58% 77.12% 139.14% 154.35%
Return on Assets (ROA)
Reported ROA 0.34% 13.30% 12.35% 7.72% 11.66%
Adjusted ROA 0.43% 16.51% 15.46% 9.90% 15.40%

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 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 improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

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

Adjusted Net Profit Margin

Microsoft Excel
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 Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc. 365 14,519 13,049 7,067 10,005
Sales 60,115 59,283 48,704 47,994 46,840
Profitability Ratio
Adjusted net profit margin2 0.61% 24.49% 26.79% 14.72% 21.36%

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 × 365 ÷ 60,115 = 0.61%

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

Adjusted Total Asset Turnover

Microsoft Excel
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 Goodwill
Selected Financial Data (US$ in millions)
Sales 60,115 59,283 48,704 47,994 46,840
Adjusted total assets 85,478 87,956 84,430 71,350 64,972
Activity Ratio
Adjusted total asset turnover2 0.70 0.67 0.58 0.67 0.72

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 ÷ 85,478 = 0.70

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.

Adjusted Financial Leverage

Microsoft Excel
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 Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 85,478 87,956 84,430 71,350 64,972
Adjusted total Merck & Co., Inc. stockholders’ equity 16,384 24,787 16,920 5,079 6,482
Solvency Ratio
Adjusted financial leverage2 5.22 3.55 4.99 14.05 10.02

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
= 85,478 ÷ 16,384 = 5.22

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.

Adjusted Return on Equity (ROE)

Microsoft Excel
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 Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc. 365 14,519 13,049 7,067 10,005
Adjusted total Merck & Co., Inc. stockholders’ equity 16,384 24,787 16,920 5,079 6,482
Profitability Ratio
Adjusted ROE2 2.23% 58.58% 77.12% 139.14% 154.35%

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 × 365 ÷ 16,384 = 2.23%

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.

Adjusted Return on Assets (ROA)

Microsoft Excel
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 Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc. 365 14,519 13,049 7,067 10,005
Adjusted total assets 85,478 87,956 84,430 71,350 64,972
Profitability Ratio
Adjusted ROA2 0.43% 16.51% 15.46% 9.90% 15.40%

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 × 365 ÷ 85,478 = 0.43%

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 improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.