Stock Analysis on Net

Merck & Co. Inc. (NYSE:MRK)

Analysis of Inventory

Microsoft Excel

Inventory Disclosure

Merck & Co. Inc., balance sheet: inventory

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Finished goods 1,954 1,841 1,747 1,963 1,772
Raw materials and work in process 8,037 7,063 6,220 6,420 5,650
Supplies 277 238 196 206 207
Inventories, approximates current cost 10,268 9,142 8,163 8,589 7,629
Increase (decrease) to LIFO costs (562) (293) (16) (82) (171)
Inventories 9,706 8,849 8,147 8,507 7,458
Less: Inventories recognized as other assets (3,348) (2,938) (2,194) (2,197) (1,480)
Inventories, excludes inventories classified in Other assets 6,358 5,911 5,953 6,310 5,978

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
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Merck & Co. Inc. inventories increased from 2021 to 2022 and from 2022 to 2023.

Adjustment to Inventory: Conversion from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Inventories
Inventories at LIFO (as reported) 9,706 8,849 8,147 8,507 7,458
Add: Inventory LIFO reserve 562 293 16 82 171
Inventories at FIFO (adjusted) 10,268 9,142 8,163 8,589 7,629
Adjustment to Current Assets
Current assets (as reported) 32,168 35,722 30,266 27,764 27,483
Add: Inventory LIFO reserve 562 293 16 82 171
Current assets (adjusted) 32,730 36,015 30,282 27,846 27,654
Adjustment to Total Assets
Total assets (as reported) 106,675 109,160 105,694 91,588 84,397
Add: Inventory LIFO reserve 562 293 16 82 171
Total assets (adjusted) 107,237 109,453 105,710 91,670 84,568
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
Add: Inventory LIFO reserve 562 293 16 82 171
Total Merck & Co., Inc. stockholders’ equity (adjusted) 38,143 46,284 38,200 25,399 26,078
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: Increase (decrease) in inventory LIFO reserve 269 277 (65) (89) 172
Net income attributable to Merck & Co., Inc. (adjusted) 634 14,796 12,984 6,978 10,015

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. inventory value on Dec 31, 2023 would be $10,268 (in millions) if the FIFO inventory method was used instead of LIFO. Merck & Co. Inc. inventories, valued on a LIFO basis, on Dec 31, 2023 were $9,706. Merck & Co. Inc. inventories would have been $562 higher than reported on Dec 31, 2023 if the FIFO method had been used instead.


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


Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Merck & Co. Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current Ratio
Reported current ratio (LIFO) 1.25 1.47 1.27 1.02 1.24
Adjusted current ratio (FIFO) 1.27 1.49 1.27 1.02 1.24
Net Profit Margin
Reported net profit margin (LIFO) 0.61% 24.49% 26.79% 14.72% 21.01%
Adjusted net profit margin (FIFO) 1.05% 24.96% 26.66% 14.54% 21.38%
Total Asset Turnover
Reported total asset turnover (LIFO) 0.56 0.54 0.46 0.52 0.55
Adjusted total asset turnover (FIFO) 0.56 0.54 0.46 0.52 0.55
Financial Leverage
Reported financial leverage (LIFO) 2.84 2.37 2.77 3.62 3.26
Adjusted financial leverage (FIFO) 2.81 2.36 2.77 3.61 3.24
Return on Equity (ROE)
Reported ROE (LIFO) 0.97% 31.57% 34.17% 27.91% 37.99%
Adjusted ROE (FIFO) 1.66% 31.97% 33.99% 27.47% 38.40%
Return on Assets (ROA)
Reported ROA (LIFO) 0.34% 13.30% 12.35% 7.72% 11.66%
Adjusted ROA (FIFO) 0.59% 13.52% 12.28% 7.61% 11.84%

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).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Merck & Co. Inc. adjusted current ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.
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 Current Ratio

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)
Current assets 32,168 35,722 30,266 27,764 27,483
Current liabilities 25,694 24,239 23,872 27,327 22,220
Liquidity Ratio
Current ratio1 1.25 1.47 1.27 1.02 1.24
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets 32,730 36,015 30,282 27,846 27,654
Current liabilities 25,694 24,239 23,872 27,327 22,220
Liquidity Ratio
Adjusted current ratio2 1.27 1.49 1.27 1.02 1.24

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 Current ratio = Current assets ÷ Current liabilities
= 32,168 ÷ 25,694 = 1.25

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 32,730 ÷ 25,694 = 1.27

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Merck & Co. Inc. adjusted current ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc. 634 14,796 12,984 6,978 10,015
Sales 60,115 59,283 48,704 47,994 46,840
Profitability Ratio
Adjusted net profit margin2 1.05% 24.96% 26.66% 14.54% 21.38%

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 × 634 ÷ 60,115 = 1.05%

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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Sales 60,115 59,283 48,704 47,994 46,840
Adjusted total assets 107,237 109,453 105,710 91,670 84,568
Activity Ratio
Adjusted total asset turnover2 0.56 0.54 0.46 0.52 0.55

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 ÷ 107,237 = 0.56

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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets 107,237 109,453 105,710 91,670 84,568
Adjusted total Merck & Co., Inc. stockholders’ equity 38,143 46,284 38,200 25,399 26,078
Solvency Ratio
Adjusted financial leverage2 2.81 2.36 2.77 3.61 3.24

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
= 107,237 ÷ 38,143 = 2.81

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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc. 634 14,796 12,984 6,978 10,015
Adjusted total Merck & Co., Inc. stockholders’ equity 38,143 46,284 38,200 25,399 26,078
Profitability Ratio
Adjusted ROE2 1.66% 31.97% 33.99% 27.47% 38.40%

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 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 × 634 ÷ 38,143 = 1.66%

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: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc. 634 14,796 12,984 6,978 10,015
Adjusted total assets 107,237 109,453 105,710 91,670 84,568
Profitability Ratio
Adjusted ROA2 0.59% 13.52% 12.28% 7.61% 11.84%

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 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 × 634 ÷ 107,237 = 0.59%

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.