Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Long-term Activity Ratios (Summary)
Merck & Co. Inc., long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
An analysis of long-term activity ratios reveals fluctuating performance across the observed period. Generally, the company demonstrates a moderate level of asset utilization, with some ratios exhibiting increasing trends followed by stabilization or decline.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio initially increased from 2.53 in 2021 to 2.77 in 2022, indicating improved efficiency in generating revenue from fixed assets. This was followed by a slight decrease to 2.61 in 2023, a rebound to 2.70 in 2024, and a subsequent decline to 2.57 in 2025. The overall trend suggests a relatively stable, though modestly fluctuating, ability to generate sales from its fixed asset base.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- When considering operating leases and right-of-use assets, the net fixed asset turnover ratio mirrors the trend of the standard net fixed asset turnover. It rose from 2.33 in 2021 to 2.60 in 2022, decreased to 2.45 in 2023, increased to 2.55 in 2024, and then decreased to 2.42 in 2025. The inclusion of these lease assets results in lower turnover values compared to the standard calculation, but the directional changes remain consistent. This suggests that the impact of operating leases on asset utilization is relatively stable over the period.
- Total Asset Turnover
- The total asset turnover ratio demonstrates an increasing trend from 0.46 in 2021 to 0.56 in 2023, indicating improved efficiency in utilizing all assets to generate revenue. However, this was followed by a slight decrease to 0.55 in 2024 and a more noticeable decline to 0.47 in 2025. The 2025 value represents a return to levels similar to those observed in 2021, suggesting a potential weakening in overall asset utilization efficiency towards the end of the period.
- Equity Turnover
- The equity turnover ratio increased significantly from 1.28 in 2021 to 1.60 in 2023, indicating a greater ability to generate revenue from shareholder equity. This was followed by a decrease to 1.39 in 2024 and a further decline to 1.24 in 2025. The ratio’s movement suggests a fluctuating relationship between revenue generation and equity investment, with a peak in 2023 followed by a reduction in subsequent years.
In summary, the observed ratios indicate a period of improving asset utilization efficiency up to 2023, followed by a stabilization or slight decline in 2024 and 2025. The fluctuations across all ratios warrant further investigation to determine the underlying drivers and potential implications for future performance.
Net Fixed Asset Turnover
Merck & Co. Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Property, plant and equipment, at cost, net of accumulated depreciation | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover = Sales ÷ Property, plant and equipment, at cost, net of accumulated depreciation
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio exhibits a generally stable pattern over the five-year period, with fluctuations indicating changes in the efficiency with which fixed assets are utilized to generate sales. Sales demonstrate a consistent upward trend, while the net value of property, plant, and equipment also increases, though at a slightly more moderate pace.
- Overall Trend
- The net fixed asset turnover ratio initially increased from 2.53 in 2021 to 2.77 in 2022, suggesting improved efficiency in asset utilization. This was followed by a slight decrease to 2.61 in 2023, then a recovery to 2.70 in 2024. The most recent year, 2025, shows a further decrease to 2.57. While fluctuations exist, the ratio remains within a relatively narrow range, indicating consistent, though not dramatically changing, operational efficiency.
- Sales Performance
- Sales increased steadily throughout the period, growing from US$48,704 million in 2021 to US$65,011 million in 2025. This consistent growth in sales contributes to the observed turnover ratio values. The rate of sales growth appears to moderate slightly in the later years of the period.
- Fixed Asset Investment
- The net value of property, plant, and equipment increased from US$19,279 million in 2021 to US$25,316 million in 2025. This indicates ongoing investment in fixed assets. The increase in fixed assets, while contributing to sales capacity, may also explain the slight fluctuations in the net fixed asset turnover ratio, as the denominator of the ratio grows.
- Ratio Interplay
- The initial increase in the net fixed asset turnover ratio in 2022 likely reflects a greater proportional increase in sales compared to the increase in net fixed assets. The subsequent fluctuations suggest that the growth in sales and fixed assets are becoming more aligned. The decrease in 2025 could indicate that fixed asset investment is outpacing sales growth, or that the new assets have not yet reached their full productive capacity.
In conclusion, the net fixed asset turnover ratio demonstrates a generally healthy and stable performance, with moderate fluctuations influenced by the concurrent trends in sales and fixed asset investment. Continued monitoring of this ratio, alongside its component elements, is recommended to assess ongoing operational efficiency.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Merck & Co. Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Property, plant and equipment, at cost, net of accumulated depreciation | ||||||
| Operating lease right-of-use asset (included in Other assets) | ||||||
| Property, plant and equipment, at cost, net of accumulated depreciation (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Sales ÷ Property, plant and equipment, at cost, net of accumulated depreciation (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
Over the five-year period examined, sales exhibited a generally increasing trajectory, while the value of property, plant, and equipment, net of accumulated depreciation and including operating lease right-of-use assets, also demonstrated consistent growth. The net fixed asset turnover ratio, which measures the efficiency with which a company utilizes its fixed assets to generate sales, showed fluctuations during this period.
- Sales Trend
- Sales increased from US$48,704 million in 2021 to US$65,011 million in 2025, representing a cumulative growth of approximately 33.4%. The most significant year-over-year increase occurred between 2021 and 2022, with sales rising by approximately 21.7%. Growth rates moderated in subsequent years, remaining positive but less pronounced.
- Fixed Asset Investment Trend
- The net value of property, plant, and equipment increased steadily from US$20,865 million in 2021 to US$26,823 million in 2025, indicating ongoing investment in fixed assets. The rate of increase in fixed assets was relatively consistent across the period, suggesting a deliberate and sustained capital expenditure strategy.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio began at 2.33 in 2021, increased to a peak of 2.60 in 2022, then decreased to 2.45 in 2023. A subsequent increase to 2.55 was observed in 2024, followed by a slight decline to 2.42 in 2025. This suggests an initial improvement in asset utilization efficiency, followed by some variability. While the ratio did not return to the 2021 level, it remained within a relatively narrow range between 2.42 and 2.60 throughout the period. The fluctuations may be attributable to the differing rates of sales growth and fixed asset investment.
In summary, the company demonstrated both sales growth and continued investment in fixed assets. The net fixed asset turnover ratio indicates a generally efficient use of these assets, although the ratio experienced some fluctuation, suggesting potential areas for further optimization of asset utilization.
Total Asset Turnover
Merck & Co. Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Total Asset Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Total Asset Turnover, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Total asset turnover = Sales ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibited fluctuating performance over the five-year period. Initial increases were followed by a decline, suggesting shifts in the efficiency with which assets were utilized to generate sales.
- Overall Trend
- The ratio began at 0.46 in 2021, increasing to a peak of 0.56 in 2023 before decreasing to 0.47 in 2025. This indicates an initial improvement in asset utilization, followed by a weakening trend in later years.
- Initial Improvement (2021-2023)
- From 2021 to 2023, the total asset turnover ratio demonstrated consistent growth. An increase from 0.46 to 0.56 suggests that the company became more efficient in generating sales from its asset base during this period. This improvement could be attributed to factors such as enhanced operational efficiency, better inventory management, or increased demand for products.
- Subsequent Decline (2023-2025)
- Following the peak in 2023, the ratio experienced a decline to 0.55 in 2024 and further to 0.47 in 2025. This decrease suggests a reduced efficiency in asset utilization. Potential causes include an increase in total assets without a corresponding increase in sales, a slowdown in sales growth, or the accumulation of underperforming assets.
- Sales and Asset Relationship
- Sales increased consistently from 2021 to 2025, however, the growth in total assets outpaced sales growth between 2023 and 2025. This disparity likely contributed to the observed decline in the total asset turnover ratio. The significant increase in total assets in 2024 and 2025, particularly the jump to 136,866 in 2025, warrants further investigation to determine the nature of these asset additions and their contribution to revenue generation.
In conclusion, while initial years showed positive trends in asset utilization, the more recent decline suggests a need to evaluate asset management strategies and identify areas for improvement to enhance the efficiency of sales generation.
Equity Turnover
Merck & Co. Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Total Merck & Co., Inc. stockholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| Equity Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| Equity Turnover, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Equity turnover = Sales ÷ Total Merck & Co., Inc. stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The equity turnover ratio exhibits fluctuations over the five-year period. Initial values are relatively stable, followed by a notable increase and subsequent decline.
- Equity Turnover Trend
- The equity turnover ratio began at 1.28 in 2021 and remained nearly unchanged at 1.29 in 2022. A significant increase was observed in 2023, rising to 1.60. This indicates a more efficient utilization of equity to generate sales during that year. However, the ratio decreased to 1.39 in 2024 and further declined to 1.24 in 2025, suggesting a reduced efficiency in equity utilization in the latter years of the observed period.
Sales demonstrate a consistent upward trend throughout the period, increasing from US$48,704 million in 2021 to US$65,011 million in 2025. This growth in sales did not consistently correlate with the equity turnover ratio, particularly evident in 2024 and 2025 where sales continued to rise while equity turnover decreased.
- Stockholders’ Equity Trend
- Total stockholders’ equity increased from US$38,184 million in 2021 to US$45,991 million in 2022. A decrease was then recorded in 2023, falling to US$37,581 million. Equity then increased again in 2024 to US$46,313 million, and continued to rise in 2025, reaching US$52,606 million. The fluctuations in equity levels likely contribute to the observed changes in the equity turnover ratio.
The combination of increasing sales and fluctuating equity suggests a dynamic relationship between revenue generation and the company’s equity base. The peak in equity turnover in 2023 warrants further investigation to understand the factors driving that efficiency, while the subsequent decline despite continued sales growth suggests potential changes in operational leverage or asset utilization.