Inventory Disclosure
Adjustment to Inventory: Conversion from LIFO to FIFO
Adjusted Financial Ratios: LIFO vs. FIFO (Summary)
Adjusted Current Ratio
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Merck & Co. Inc., balance sheet: inventory

US$ in millions

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Finished goods	2,022)	1,954)	1,841)	1,747)	1,963)
Raw materials and work in process	8,831)	8,037)	7,063)	6,220)	6,420)
Supplies	289)	277)	238)	196)	206)
Inventories, approximates current cost	11,142)	10,268)	9,142)	8,163)	8,589)
Increase (decrease) to LIFO costs	(840)	(562)	(293)	(16)	(82)
Inventories	10,302)	9,706)	8,849)	8,147)	8,507)
Less: Inventories recognized as other assets	(4,193)	(3,348)	(2,938)	(2,194)	(2,197)
Inventories, excludes inventories classified in Other assets	6,109)	6,358)	5,911)	5,953)	6,310)

Based on: 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), 10-K (reporting date: 2020-12-31).

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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 2022 to 2023 and from 2023 to 2024.

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Adjustment to Inventories
Inventories at LIFO (as reported)	10,302)	9,706)	8,849)	8,147)	8,507)
Add: Inventory LIFO reserve	840)	562)	293)	16)	82)
Inventories at FIFO (adjusted)	11,142)	10,268)	9,142)	8,163)	8,589)
Adjustment to Current Assets
Current assets (as reported)	38,782)	32,168)	35,722)	30,266)	27,764)
Add: Inventory LIFO reserve	840)	562)	293)	16)	82)
Current assets (adjusted)	39,622)	32,730)	36,015)	30,282)	27,846)
Adjustment to Total Assets
Total assets (as reported)	117,106)	106,675)	109,160)	105,694)	91,588)
Add: Inventory LIFO reserve	840)	562)	293)	16)	82)
Total assets (adjusted)	117,946)	107,237)	109,453)	105,710)	91,670)
Adjustment to Total Merck & Co., Inc. Stockholders’ Equity
Total Merck & Co., Inc. stockholders’ equity (as reported)	46,313)	37,581)	45,991)	38,184)	25,317)
Add: Inventory LIFO reserve	840)	562)	293)	16)	82)
Total Merck & Co., Inc. stockholders’ equity (adjusted)	47,153)	38,143)	46,284)	38,200)	25,399)
Adjustment to Net Income Attributable To Merck & Co., Inc.
Net income attributable to Merck & Co., Inc. (as reported)	17,117)	365)	14,519)	13,049)	7,067)
Add: Increase (decrease) in inventory LIFO reserve	278)	269)	277)	(65)	(89)
Net income attributable to Merck & Co., Inc. (adjusted)	17,395)	634)	14,796)	12,984)	6,978)

Based on: 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), 10-K (reporting date: 2020-12-31).

Merck & Co. Inc. inventory value on Dec 31, 2024 would be $11,142) (in millions) if the FIFO inventory method was used instead of LIFO. Merck & Co. Inc. inventories, valued on a LIFO basis, on Dec 31, 2024 were $10,302). Merck & Co. Inc. inventories would have been $840) higher than reported on Dec 31, 2024 if the FIFO method had been used instead.

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

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Merck & Co. Inc., adjusted financial ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Current Ratio
Reported current ratio (LIFO)	1.36	1.25	1.47	1.27	1.02
Adjusted current ratio (FIFO)	1.39	1.27	1.49	1.27	1.02
Net Profit Margin
Reported net profit margin (LIFO)	26.68%	0.61%	24.49%	26.79%	14.72%
Adjusted net profit margin (FIFO)	27.11%	1.05%	24.96%	26.66%	14.54%
Total Asset Turnover
Reported total asset turnover (LIFO)	0.55	0.56	0.54	0.46	0.52
Adjusted total asset turnover (FIFO)	0.54	0.56	0.54	0.46	0.52
Financial Leverage
Reported financial leverage (LIFO)	2.53	2.84	2.37	2.77	3.62
Adjusted financial leverage (FIFO)	2.50	2.81	2.36	2.77	3.61
Return on Equity (ROE)
Reported ROE (LIFO)	36.96%	0.97%	31.57%	34.17%	27.91%
Adjusted ROE (FIFO)	36.89%	1.66%	31.97%	33.99%	27.47%
Return on Assets (ROA)
Reported ROA (LIFO)	14.62%	0.34%	13.30%	12.35%	7.72%
Adjusted ROA (FIFO)	14.75%	0.59%	13.52%	12.28%	7.61%

Based on: 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), 10-K (reporting date: 2020-12-31).

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 deteriorated from 2022 to 2023 but then improved from 2023 to 2024 not reaching 2022 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 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.
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 2022 to 2023 but then slightly deteriorated from 2023 to 2024 not reaching 2022 level.
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 increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Merck & Co. Inc. adjusted ROE deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Merck & Co. Inc. adjusted ROA deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

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

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	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Current assets	38,782)	32,168)	35,722)	30,266)	27,764)
Current liabilities	28,420)	25,694)	24,239)	23,872)	27,327)
Liquidity Ratio
Current ratio¹	1.36	1.25	1.47	1.27	1.02
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets	39,622)	32,730)	36,015)	30,282)	27,846)
Current liabilities	28,420)	25,694)	24,239)	23,872)	27,327)
Liquidity Ratio
Adjusted current ratio²	1.39	1.27	1.49	1.27	1.02

Based on: 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), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 38,782 ÷ 28,420 = 1.36

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 39,622 ÷ 28,420 = 1.39

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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 deteriorated from 2022 to 2023 but then improved from 2023 to 2024 not reaching 2022 level.

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc.	17,117)	365)	14,519)	13,049)	7,067)
Sales	64,168)	60,115)	59,283)	48,704)	47,994)
Profitability Ratio
Net profit margin¹	26.68%	0.61%	24.49%	26.79%	14.72%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc.	17,395)	634)	14,796)	12,984)	6,978)
Sales	64,168)	60,115)	59,283)	48,704)	47,994)
Profitability Ratio
Adjusted net profit margin²	27.11%	1.05%	24.96%	26.66%	14.54%

Based on: 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), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Net profit margin = 100 × Net income attributable to Merck & Co., Inc. ÷ Sales
= 100 × 17,117 ÷ 64,168 = 26.68%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Sales
= 100 × 17,395 ÷ 64,168 = 27.11%

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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 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Sales	64,168)	60,115)	59,283)	48,704)	47,994)
Total assets	117,106)	106,675)	109,160)	105,694)	91,588)
Activity Ratio
Total asset turnover¹	0.55	0.56	0.54	0.46	0.52
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Sales	64,168)	60,115)	59,283)	48,704)	47,994)
Adjusted total assets	117,946)	107,237)	109,453)	105,710)	91,670)
Activity Ratio
Adjusted total asset turnover²	0.54	0.56	0.54	0.46	0.52

Based on: 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), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Total asset turnover = Sales ÷ Total assets
= 64,168 ÷ 117,106 = 0.55

² Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 64,168 ÷ 117,946 = 0.54

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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 2022 to 2023 but then slightly deteriorated from 2023 to 2024 not reaching 2022 level.

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Total assets	117,106)	106,675)	109,160)	105,694)	91,588)
Total Merck & Co., Inc. stockholders’ equity	46,313)	37,581)	45,991)	38,184)	25,317)
Solvency Ratio
Financial leverage¹	2.53	2.84	2.37	2.77	3.62
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets	117,946)	107,237)	109,453)	105,710)	91,670)
Adjusted total Merck & Co., Inc. stockholders’ equity	47,153)	38,143)	46,284)	38,200)	25,399)
Solvency Ratio
Adjusted financial leverage²	2.50	2.81	2.36	2.77	3.61

Based on: 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), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Financial leverage = Total assets ÷ Total Merck & Co., Inc. stockholders’ equity
= 117,106 ÷ 46,313 = 2.53

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Merck & Co., Inc. stockholders’ equity
= 117,946 ÷ 47,153 = 2.50

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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 increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc.	17,117)	365)	14,519)	13,049)	7,067)
Total Merck & Co., Inc. stockholders’ equity	46,313)	37,581)	45,991)	38,184)	25,317)
Profitability Ratio
ROE¹	36.96%	0.97%	31.57%	34.17%	27.91%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc.	17,395)	634)	14,796)	12,984)	6,978)
Adjusted total Merck & Co., Inc. stockholders’ equity	47,153)	38,143)	46,284)	38,200)	25,399)
Profitability Ratio
Adjusted ROE²	36.89%	1.66%	31.97%	33.99%	27.47%

Based on: 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), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ ROE = 100 × Net income attributable to Merck & Co., Inc. ÷ Total Merck & Co., Inc. stockholders’ equity
= 100 × 17,117 ÷ 46,313 = 36.96%

² Adjusted ROE = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted total Merck & Co., Inc. stockholders’ equity
= 100 × 17,395 ÷ 47,153 = 36.89%

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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 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc.	17,117)	365)	14,519)	13,049)	7,067)
Total assets	117,106)	106,675)	109,160)	105,694)	91,588)
Profitability Ratio
ROA¹	14.62%	0.34%	13.30%	12.35%	7.72%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Merck & Co., Inc.	17,395)	634)	14,796)	12,984)	6,978)
Adjusted total assets	117,946)	107,237)	109,453)	105,710)	91,670)
Profitability Ratio
Adjusted ROA²	14.75%	0.59%	13.52%	12.28%	7.61%

Based on: 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), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ ROA = 100 × Net income attributable to Merck & Co., Inc. ÷ Total assets
= 100 × 17,117 ÷ 117,106 = 14.62%

² Adjusted ROA = 100 × Adjusted net income attributable to Merck & Co., Inc. ÷ Adjusted total assets
= 100 × 17,395 ÷ 117,946 = 14.75%

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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 deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

Merck & Co. Inc. (NYSE:MRK)

Analysis of Inventory

Inventory Disclosure

Adjustment to Inventory: Conversion from LIFO to FIFO

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

Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

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

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)