Stock Analysis on Net
Stock Analysis on Net

Merck & Co. Inc. (NYSE:MRK)

Analysis of Operating Leases

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An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Adjustments to Financial Statements for Operating Leases

Merck & Co. Inc., adjustments to financial statements

US$ in millions

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported) 106,675 109,160 105,694 91,588 84,397
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 — — — — —
Total assets (adjusted) 106,675 109,160 105,694 91,588 84,397
Adjustment to Total Debt
Total debt (as reported) 35,055 30,691 33,102 31,791 26,346
Add: Operating lease liability (before adoption of FASB Topic 842)2 — — — — —
Add: Current operating lease liability (included in Accrued and other current liabilities) 285 281 304 300 236
Add: Noncurrent operating lease liability (included in Other noncurrent liabilities) 928 1,013 1,225 1,362 768
Total debt (adjusted) 36,268 31,985 34,631 33,453 27,350

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).

1, 2 Equal to total present value of future operating lease payments.

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

Adjusted Financial Ratios for Operating Leases (Summary)

Merck & Co. Inc., adjusted financial ratios

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Total Asset Turnover1
Reported total asset turnover 0.56 0.54 0.46 0.52 0.55
Adjusted total asset turnover 0.56 0.54 0.46 0.52 0.55
Debt to Equity2
Reported debt to equity 0.93 0.67 0.87 1.26 1.02
Adjusted debt to equity 0.97 0.70 0.91 1.32 1.06
Return on Assets3 (ROA)
Reported ROA 0.34% 13.30% 12.35% 7.72% 11.66%
Adjusted ROA 0.34% 13.30% 12.35% 7.72% 11.66%

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).

1 See details »

2 See details »

3 See details »

Financial 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 debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Merck & Co. Inc. adjusted debt to equity ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as 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 Total Asset Turnover

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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 for Operating Leases
Selected Financial Data (US$ in millions)
Sales 60,115 59,283 48,704 47,994 46,840
Adjusted total assets 106,675 109,160 105,694 91,588 84,397
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 ÷ 106,675 = 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 Debt to Equity

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Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total debt 35,055 30,691 33,102 31,791 26,346
Total Merck & Co., Inc. stockholders’ equity 37,581 45,991 38,184 25,317 25,907
Solvency Ratio
Debt to equity1 0.93 0.67 0.87 1.26 1.02
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 36,268 31,985 34,631 33,453 27,350
Total Merck & Co., Inc. stockholders’ equity 37,581 45,991 38,184 25,317 25,907
Solvency Ratio
Adjusted debt to equity2 0.97 0.70 0.91 1.32 1.06

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 Debt to equity = Total debt ÷ Total Merck & Co., Inc. stockholders’ equity
= 35,055 ÷ 37,581 = 0.93

2 Adjusted debt to equity = Adjusted total debt ÷ Total Merck & Co., Inc. stockholders’ equity
= 36,268 ÷ 37,581 = 0.97

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Merck & Co. Inc. adjusted debt-to-equity ratio improved from 2021 to 2022 but then deteriorated significantly 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 for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Merck & Co., Inc. 365 14,519 13,049 7,067 9,843
Adjusted total assets 106,675 109,160 105,694 91,588 84,397
Profitability Ratio
Adjusted ROA2 0.34% 13.30% 12.35% 7.72% 11.66%

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 × Net income attributable to Merck & Co., Inc. ÷ Adjusted total assets
= 100 × 365 ÷ 106,675 = 0.34%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as 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.