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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
- 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)
Income Tax Expense (Benefit)
Merck & Co. Inc., income tax expense (benefit), continuing operations
US$ in millions
12 months ended: | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||||||
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Federal | |||||||||||
Foreign | |||||||||||
State | |||||||||||
Current provision | |||||||||||
Federal | |||||||||||
Foreign | |||||||||||
State | |||||||||||
Deferred provision | |||||||||||
Taxes on income |
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
Item | Description | The company |
---|---|---|
Current provision | Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. | Merck & Co. Inc.’s current provision decreased from 2017 to 2018 and from 2018 to 2019. |
Deferred provision | Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. | Merck & Co. Inc.’s deferred provision increased from 2017 to 2018 but then slightly decreased from 2018 to 2019. |
Taxes on income | Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. | Merck & Co. Inc.’s taxes on income decreased from 2017 to 2018 and from 2018 to 2019. |
Effective Income Tax Rate (EITR)
Merck & Co. Inc., effective income tax rate (EITR) reconciliation
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
Item | Description | The company |
---|---|---|
Effective tax rate, before impact of the TCJA | Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. | Merck & Co. Inc.’s effective tax rate, before impact of the TCJA increased from 2017 to 2018 but then decreased significantly from 2018 to 2019. |
Components of Deferred Tax Assets and Liabilities
Merck & Co. Inc., components of deferred tax assets and liabilities
US$ in millions
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
Item | Description | The company |
---|---|---|
Gross deferred tax assets | Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. | Merck & Co. Inc.’s gross deferred tax assets increased from 2017 to 2018 and from 2018 to 2019. |
Deferred tax assets | Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. | Merck & Co. Inc.’s deferred tax assets decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
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.’s net deferred income taxes increased from 2017 to 2018 and from 2018 to 2019. |
Deferred Tax Assets and Liabilities, Classification
Merck & Co. Inc., deferred tax assets and liabilities, classification
US$ in millions
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
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Deferred income tax assets (included in Other assets) | ||||||
Deferred income tax liabilities |
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
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.’s deferred income tax assets (included in Other assets) increased from 2017 to 2018 and from 2018 to 2019. |
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.’s deferred income tax liabilities decreased from 2017 to 2018 and from 2018 to 2019. |
Adjustments to Financial Statements: Removal of Deferred Taxes
Merck & Co. Inc., adjustments to financial statements
US$ in millions
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
Merck & Co. Inc., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Merck & Co. Inc., adjusted financial ratios
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
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.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Merck & Co. Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
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 ratio increased from 2017 to 2018 and from 2018 to 2019. |
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. | Merck & Co. Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Merck & Co. Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019. |
Merck & Co. Inc., Financial Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
2019 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 × ÷ =
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.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
2019 Calculations
1 Total asset turnover = Sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= ÷ =
Activity 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 ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Financial Leverage
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
2019 Calculations
1 Financial leverage = Total assets ÷ Total Merck & Co., Inc. stockholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Merck & Co., Inc. stockholders’ equity
= ÷ =
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.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
2019 Calculations
1 ROE = 100 × Net income attributable to Merck & Co., Inc. ÷ Total Merck & Co., Inc. stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted total Merck & Co., Inc. stockholders’ equity
= 100 × ÷ =
Profitability 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 improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-26).
2019 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 × ÷ =
Profitability 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 improved from 2017 to 2018 and from 2018 to 2019. |