Merck & Co. Inc. (NYSE:MRK)

Debt to Equity Ratio

The debt to equity ratio demonstrates notable fluctuations over the observed periods. Initially, it started at 1.07 in the first quarter of 2020 and increased slightly to 1.26 by the end of that year. This indicates a rising reliance on debt relative to equity during 2020. In 2021, the ratio decreased, reaching a low of 0.66 in the fourth quarter, suggesting improved equity financing or debt reduction. However, the ratio rose again in 2023, peaking near 0.95 mid-year before displaying a gradual decline towards 0.72 by the middle of 2025. Overall, the trend reveals periods of debt reduction followed by moderate increases, with the ratio remaining mostly below 1.0 in the latter years.

Debt to Capital Ratio

This ratio follows a broadly similar pattern to the debt to equity ratio but at a lower magnitude. Starting at 0.52 in early 2020, it saw a peak of 0.56 by the end of that year. Subsequently, there was a steady decline through 2021 and 2022, reaching around 0.40 by the end of 2022. An increase occurred in 2023, with the ratio rising back to approximately 0.49 mid-year, followed by a gradual decrease and stabilization near 0.42 toward mid-2025. This pattern suggests fluctuations in the company's use of debt within its total capital structure, with a tendency to reduce leverage after peaks but some re-escalation in 2023.

Debt to Assets Ratio

The debt to assets ratio shows moderate variability but less pronounced volatility relative to the other leverage ratios. It began around 0.33 in the first quarter of 2020, rising to a peak of 0.35 near year-end 2020, then declining to approximately 0.28 by the end of 2022. A noticeable increase to 0.35 occurred again mid-2023, followed by a generally declining trend towards 0.30 in mid-2025. This indicates that the proportion of assets financed by debt decreased after 2020 but showed some uptick in 2023 before stabilizing at a moderate level.

Financial Leverage

Financial leverage, measured as the ratio of total assets to equity, presented a high value of 3.24 in early 2020, which further intensified to 3.62 at the end of that year. The ratio then steadily declined throughout 2021 and 2022, reaching a low of 2.3 by the fourth quarter of 2022. In 2023, the leverage ratio experienced a rebound, climbing to 2.84 in the fourth quarter before gradually decreasing again and stabilizing near 2.4 by mid-2025. This reflects an initial period of high leverage followed by deleveraging, with some resurgence of leverage in 2023, but overall maintaining lower levels than the early 2020 peak.

Summary of Leverage Trends

Across all leverage ratios, a general pattern emerges of increased debt usage and financial leverage through 2020, followed by a consistent deleveraging phase in 2021 and 2022. In 2023, the data reveals a reversal with leverage ratios climbing again to modestly higher levels before resuming a downward or stable trend into 2025. This suggests strategic adjustments in capital structure, balancing between debt reduction and occasional increases in leverage to possibly support growth or other corporate initiatives. Overall, the company's leverage remains managed within moderate levels, without extreme volatility or sustained high leverage throughout the recent periods.

The analysis of the quarterly financial data reveals notable trends in debt, equity, and their relationship over the given periods.

Total Debt

Total debt exhibited fluctuations throughout the timeline. Initially, debt increased from approximately $27,998 million in March 2020 to a peak near $33,102 million in December 2021, reflecting a general upward trend in the first two years. Subsequently, total debt stabilized around $30,000 million to $35,000 million, with some variability, reaching about $35,402 million in June 2025. The pattern indicates some periods of debt reduction, notably mid-2020 and mid-2023, followed by re-accumulation of debt towards the most recent quarters.

Total Stockholders’ Equity

Stockholders’ equity demonstrated an overall growth trend across the analyzed intervals. Starting at $26,205 million in March 2020, equity rose steadily, reaching a high of $48,993 million in June 2025. Despite some intermittent declines—for example, a drop from $46,834 million in March 2023 to $37,581 million in December 2023—the general movement was upward, indicating strengthening equity bases over the years. The growth in equity was most pronounced during late 2020 through 2022, with recovery observed after any decreases.

Debt to Equity Ratio

The debt to equity ratio presented a volatile but generally declining relationship, signifying improved capital structure and relative reduction in leverage. Initially, the ratio was slightly above 1.0 in early 2020, peaking at 1.26 in December 2020, which suggests a period of increased debt relative to equity. Post-2020, the ratio dropped significantly to around 0.67 by December 2022, marking a phase of deleveraging and enhanced equity growth. Thereafter, it experienced increases and decreases, fluctuating between approximately 0.72 and 0.95 up to mid-2025, but overall remained below earlier peak levels, implying a more balanced and less risky financial leverage position in recent periods.

In summary, the data reflect a financial evolution characterized by initial increases in both debt and equity, followed by equity growth outpacing debt accumulation, leading to a reduction in the debt to equity ratio. This suggests a strategic strengthening of the equity base, reduction of relative leverage, and potentially improved financial stability over the observed timeframe.

Total Debt

The total debt of the company exhibits a fluctuating trend over the observed periods. Starting at approximately $27.998 billion in March 2020, it increased to a peak near $33.102 billion in December 2021. Subsequently, the debt level decreased towards mid-2023, reaching about $30.746 billion in March 2023. However, from that point forward, there was a general upward movement with some volatility, culminating in a high of around $38.131 billion in June 2024. Toward the latest periods, there was a slight decline, finishing near $35.402 billion in June 2025. This pattern suggests periods of debt accumulation alternating with efforts to reduce leverage.

Total Capital

Total capital has shown an overall increasing trajectory over the period under review. Beginning at roughly $54.203 billion in March 2020, total capital progressively climbed, with occasional modest declines. By December 2021, the capital had climbed to about $71.286 billion, marking a substantial increase. This positive trend continued into mid-2024, where total capital reached its peak at approximately $83.424 billion in March 2025. Despite minor fluctuations in some quarters, the long-term pattern indicates steady growth in the company’s capital base, reflecting potentially increased equity or retained earnings in conjunction with debt financing.

Debt to Capital Ratio

The ratio of debt to total capital demonstrates variable but generally declining trends over the years. Initially, the ratio was relatively high at 0.52 in March 2020, increasing slightly to 0.56 by December 2020, indicating elevated leverage. During the first half of 2021, a significant drop occurred, with the ratio falling to as low as 0.40 by December 2022, suggesting improved capital structure through either debt reduction or growth of other capital components. In contrast, from early 2023, the ratio increased again to approximately 0.49 in June 2023, demonstrating a temporary rise in leverage. Nonetheless, following this peak, the ratio stabilized around 0.42 to 0.46 range in the latest quarters, indicating a balanced leverage position relative to total capital. Overall, the company appears to have maintained a moderate and controlled debt level relative to its capital.

Total Debt

The total debt exhibits fluctuations throughout the observed periods. Initially, from March 2020 to December 2020, there is an overall increase from 27,998 million USD to 31,791 million USD. Subsequently, the total debt decreases to a low point around June 2021 at 26,521 million USD before rising again to 33,102 million USD by December 2021. In 2022, the total debt remains relatively stable, fluctuating slightly around the 30,000 to 31,000 million USD range. However, in 2023, a noticeable increase occurs, peaking at 36,911 million USD in June, then slightly declining thereafter but still maintaining higher levels compared to previous years. The beginning of 2024 shows fluctuations with values ranging approximately between 34,000 to 38,000 million USD, ending slightly lower at around 35,402 million USD in June 2025.

Total Assets

Total assets generally show a consistent growth trend over the period analyzed. Starting at 84,913 million USD in March 2020, assets increase steadily with minor variability, reaching a peak of approximately 117,532 million USD in June 2024. Despite occasional minor declines, such as towards the end of 2023 and early 2024, the overall trend remains positive with assets increasing over the five-year horizon. The smallest fluctuations occur in the earlier years with more pronounced growth observable after 2021, indicating asset accumulation or appreciation.

Debt to Assets Ratio

The debt to assets ratio remains fairly stable but shows subtle cyclicality. It starts around 0.33 in early 2020, slightly increasing to a high of 0.35 by December 2020, then declining to a trough near 0.28 in late 2021 and early 2022. Afterward, it oscillates between approximately 0.28 and 0.35 through 2023 and 2024, with no clear long-term upward or downward trend. These fluctuations correspond with the changes in total debt and total asset values, indicating a balanced but moderately variable leverage position across the periods.

Total Assets

The total assets show an overall increasing trend over the observed periods. Starting from 84,913 million US dollars at the end of March 2020, the assets rose steadily with some fluctuations, peaking at 117,532 million US dollars by June 2024. There are minor decreases noted between December 2021 and March 2023, as well as between March 2024 and June 2025, but the general trajectory remains upward, indicating asset growth over the five-year span.

Total Stockholders’ Equity

Stockholders’ equity demonstrated growth from 26,205 million US dollars at March 2020 to 48,993 million US dollars by June 2025. The increases were relatively consistent, with some periods showing sharper rises, particularly between December 2020 and December 2021, where equity rose from 25,317 million to 38,184 million US dollars. Notable volatility is seen between December 2022 and mid-2023, with equity declining before resuming an upward trend. This indicates variability in retained earnings, stock issuance, or other equity components across quarters, but the overall equity base strengthened significantly.

Financial Leverage

The financial leverage ratio, which measures the proportion of total assets financed by equity, shows a decreasing trend from a high of 3.62 in December 2020 to lower levels around 2.3-2.4 in early 2023. Following this, the ratio fluctuated moderately between approximately 2.3 and 2.84, ending near 2.4 by June 2025. This declining and stabilizing trend suggests a gradual reduction in reliance on debt financing relative to equity, implying improved capitalization and potentially lower financial risk over time. The ratio's fluctuations correspond with periods of changes in assets and equity, reflecting management's evolving financial structure decisions.

Summary

The financial data reflects a company with growing asset and equity bases, demonstrating expansion and capitalization improvements over the analyzed timeframe. Although some periods show temporary decreases, the overall patterns point to strengthening financial foundations and a cautious approach to financial leverage. The reduction in leverage ratio aligns with increased equity, indicating a balance shift favoring equity financing over debt. This may enhance financial stability and reduce risks associated with high debt levels.