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.
Long-term Activity Ratios (Summary)
Merck & Co. Inc., long-term (investment) activity ratios
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).
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio exhibited fluctuations over the five-year period. It decreased from 2.67 in 2020 to 2.53 in 2021, suggesting a slight decline in the efficiency of using fixed assets to generate sales. This was followed by an increase to 2.77 in 2022, indicating improved utilization. In 2023, the ratio dropped again to 2.61, before rising modestly to 2.7 in 2024. Overall, the ratio reflects some variability but remains relatively stable around the mid-2 range.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- When including operating leases and right-of-use assets, the net fixed asset turnover ratio presents a similar pattern to the traditional measure, but at slightly lower levels each year. Starting at 2.43 in 2020, it declined to 2.33 in 2021, then improved to 2.6 in 2022. The ratio decreased to 2.45 in 2023 before rising to 2.55 in 2024. The inclusion of lease assets slightly moderates turnover values but follows the same general trend of initial decline, mid-period improvement, and a final rise.
- Total Asset Turnover
- This ratio shows an initial decrease from 0.52 in 2020 to 0.46 in 2021, indicating reduced efficiency in using total assets to generate revenue. This was followed by a notable recovery in 2022 to 0.54. The ratio continued to increase to 0.56 in 2023 before slightly declining to 0.55 in 2024. The overall trend suggests an improvement in asset utilization after a dip in 2021, with relative stability in the last two years.
- Equity Turnover
- The equity turnover ratio experienced a significant decline from 1.9 in 2020 to 1.28 in 2021, implying less effective use of equity to generate revenues during that period. The ratio remained relatively flat at 1.29 in 2022, then improved to 1.6 in 2023. In 2024, it decreased to 1.39. This indicates a partial recovery in equity efficiency after 2021, though the turnover has not returned to the higher level observed in 2020.
Net Fixed Asset Turnover
Merck & Co. Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 64,168) | 60,115) | 59,283) | 48,704) | 47,994) | |
| Property, plant and equipment, at cost, net of accumulated depreciation | 23,779) | 23,051) | 21,422) | 19,279) | 17,986) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 2.70 | 2.61 | 2.77 | 2.53 | 2.67 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| AbbVie Inc. | 10.97 | 10.89 | 11.76 | 11.00 | 8.73 | |
| Amgen Inc. | 4.89 | 4.53 | 4.57 | 4.69 | 4.96 | |
| Bristol-Myers Squibb Co. | 6.77 | 6.77 | 7.38 | 7.67 | 7.22 | |
| Danaher Corp. | 4.78 | 5.25 | 7.96 | 7.77 | 6.83 | |
| Eli Lilly & Co. | 2.63 | 2.64 | 2.81 | 3.15 | 2.83 | |
| Gilead Sciences Inc. | 5.28 | 5.07 | 4.93 | 5.27 | 4.90 | |
| Johnson & Johnson | 4.33 | 4.28 | 4.79 | 4.95 | 4.40 | |
| Pfizer Inc. | 3.46 | 3.14 | 6.22 | 5.52 | 3.07 | |
| Regeneron Pharmaceuticals Inc. | 3.09 | 3.16 | 3.23 | 4.62 | 2.64 | |
| Thermo Fisher Scientific Inc. | 4.61 | 4.54 | 4.84 | 4.71 | 5.45 | |
| Vertex Pharmaceuticals Inc. | 8.98 | 8.51 | 8.06 | 6.92 | 6.47 | |
| Net Fixed Asset Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 4.18 | 4.12 | 4.98 | 4.98 | 4.31 | |
| Net Fixed Asset Turnover, Industry | ||||||
| Health Care | 8.88 | 8.80 | 9.32 | 9.09 | 8.34 | |
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).
1 2024 Calculation
Net fixed asset turnover = Sales ÷ Property, plant and equipment, at cost, net of accumulated depreciation
= 64,168 ÷ 23,779 = 2.70
2 Click competitor name to see calculations.
- Sales
- Sales demonstrated a consistent upward trend over the analyzed period, increasing from 47,994 million USD at the end of 2020 to 64,168 million USD at the end of 2024. Notably, there was a significant rise between 2021 and 2022, with sales growing from 48,704 million USD to 59,283 million USD, representing strong revenue expansion. The growth rate slowed slightly in subsequent years but maintained positive increments through 2024.
- Property, Plant, and Equipment (Net)
- Property, plant, and equipment, net of accumulated depreciation, also showed a steady increase across the period examined. The net book value rose from 17,986 million USD in 2020 to 23,779 million USD by the end of 2024. This reflects ongoing investments in fixed assets, suggesting capacity expansion or modernization efforts. The increments each year were relatively consistent, indicating a sustained capital expenditure approach.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio, which measures sales generated per unit of fixed assets, fluctuated moderately throughout the years. It started at 2.67 in 2020, declined slightly to 2.53 in 2021, then improved to 2.77 in 2022, suggesting enhanced efficiency in asset utilization during that year. Following this, the ratio decreased to 2.61 in 2023, before rising again to 2.7 in 2024. Overall, the ratio exhibited some variability but remained within a narrow range, indicating relatively stable fixed asset productivity despite increasing asset base and sales volume.
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 64,168) | 60,115) | 59,283) | 48,704) | 47,994) | |
| Property, plant and equipment, at cost, net of accumulated depreciation | 23,779) | 23,051) | 21,422) | 19,279) | 17,986) | |
| Operating lease right-of-use asset (included in Other assets) | 1,370) | 1,437) | 1,346) | 1,586) | 1,725) | |
| Property, plant and equipment, at cost, net of accumulated depreciation (including operating lease, right-of-use asset) | 25,149) | 24,488) | 22,768) | 20,865) | 19,711) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 2.55 | 2.45 | 2.60 | 2.33 | 2.43 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| AbbVie Inc. | 9.62 | 9.47 | 10.24 | 9.57 | 7.46 | |
| Amgen Inc. | 4.51 | 4.08 | 4.13 | 4.23 | 4.58 | |
| Bristol-Myers Squibb Co. | 5.78 | 5.60 | 6.18 | 6.66 | 6.30 | |
| Danaher Corp. | 3.93 | 4.26 | 6.35 | 6.10 | 5.30 | |
| Eli Lilly & Co. | 2.48 | 2.45 | 2.63 | 2.93 | 2.63 | |
| Gilead Sciences Inc. | 4.83 | 4.57 | 4.51 | 4.77 | 4.34 | |
| Johnson & Johnson | 4.11 | 4.07 | 4.54 | 4.72 | 4.18 | |
| Pfizer Inc. | 3.08 | 2.72 | 5.25 | 4.64 | 2.79 | |
| Regeneron Pharmaceuticals Inc. | 2.95 | 3.11 | 3.17 | 4.52 | 2.58 | |
| Thermo Fisher Scientific Inc. | 3.97 | 3.89 | 4.13 | 3.98 | 4.82 | |
| Vertex Pharmaceuticals Inc. | 4.26 | 6.79 | 6.13 | 5.32 | 4.83 | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 3.78 | 3.71 | 4.48 | 4.45 | 3.91 | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Health Care | 7.33 | 7.17 | 7.48 | 7.17 | 6.51 | |
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).
1 2024 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)
= 64,168 ÷ 25,149 = 2.55
2 Click competitor name to see calculations.
- Sales Trends
- Sales exhibited a consistent upward trajectory over the five-year period, increasing from 47,994 million US dollars in 2020 to 64,168 million US dollars in 2024. Notably, the most significant growth occurred between 2021 and 2022, where sales rose by approximately 21.7%, followed by steady, albeit slower, increases in subsequent years.
- Property, Plant, and Equipment (PPE)
- The net book value of property, plant, and equipment, inclusive of operating lease right-of-use assets, demonstrated a continuous increase each year, growing from 19,711 million US dollars in 2020 to 25,149 million US dollars in 2024. This steady buildup in PPE suggests ongoing investment and capital expenditure focused on long-term asset base expansion.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio, which measures efficiency in utilizing fixed assets to generate sales, showed some fluctuation during the period. It started at 2.43 in 2020 and slightly declined to 2.33 in 2021, indicating a temporary reduction in asset efficiency. However, the ratio rebounded to 2.60 in 2022, reflecting improved asset management or increased sales relative to the asset base. Subsequently, it dipped to 2.45 in 2023 before rising again to 2.55 in 2024, suggesting relatively stable operational efficiency with moderate variations.
- Overall Observations
- The data suggests that sales growth outpaced the expansion of fixed assets in key years, especially 2022, coinciding with the peak of net fixed asset turnover. This pattern may indicate effective deployment of assets to support revenue growth during that time. The steady increase in PPE points to a commitment to asset development, while fluctuations in asset turnover imply periodic adjustments in asset utilization efficiency. There is no indication of asset overcapacity given the positive sales trends and maintained turnover ratios.
Total Asset Turnover
Merck & Co. Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.55 | 0.56 | 0.54 | 0.46 | 0.52 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| AbbVie Inc. | 0.42 | 0.40 | 0.42 | 0.38 | 0.30 | |
| Amgen Inc. | 0.35 | 0.28 | 0.38 | 0.40 | 0.39 | |
| Bristol-Myers Squibb Co. | 0.52 | 0.47 | 0.48 | 0.42 | 0.36 | |
| Danaher Corp. | 0.31 | 0.28 | 0.37 | 0.35 | 0.29 | |
| Eli Lilly & Co. | 0.57 | 0.53 | 0.58 | 0.58 | 0.53 | |
| Gilead Sciences Inc. | 0.48 | 0.43 | 0.43 | 0.40 | 0.36 | |
| Johnson & Johnson | 0.49 | 0.51 | 0.51 | 0.52 | 0.47 | |
| Pfizer Inc. | 0.30 | 0.26 | 0.51 | 0.45 | 0.28 | |
| Regeneron Pharmaceuticals Inc. | 0.38 | 0.40 | 0.42 | 0.63 | 0.50 | |
| Thermo Fisher Scientific Inc. | 0.44 | 0.43 | 0.46 | 0.41 | 0.47 | |
| Vertex Pharmaceuticals Inc. | 0.49 | 0.43 | 0.49 | 0.56 | 0.53 | |
| Total Asset Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.43 | 0.40 | 0.47 | 0.45 | 0.39 | |
| Total Asset Turnover, Industry | ||||||
| Health Care | 0.75 | 0.73 | 0.75 | 0.70 | 0.64 | |
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).
1 2024 Calculation
Total asset turnover = Sales ÷ Total assets
= 64,168 ÷ 117,106 = 0.55
2 Click competitor name to see calculations.
The financial data presents several notable trends over the five-year period under review. Sales have shown a consistent upward trajectory, rising from 47,994 million US dollars in 2020 to 64,168 million US dollars in 2024. This represents a significant growth in revenue, with the most pronounced increase occurring between 2021 and 2022, where sales grew by approximately 10,579 million US dollars.
Total assets have also increased over the same timeframe, starting at 91,588 million US dollars in 2020 and reaching 117,106 million US dollars by 2024. The asset base expanded notably in 2021, with an increase of over 14,000 million US dollars compared to the prior year, though in 2023 there was a slight decline before rising again in 2024. This fluctuation suggests a possible strategic adjustment in asset management or investment activities during that period.
The total asset turnover ratio, which measures the efficiency of asset use in generating sales, exhibits some variability. It declined from 0.52 in 2020 to 0.46 in 2021, indicating a temporary reduction in asset efficiency despite increased asset levels. However, from 2022 onwards, the ratio improved steadily to 0.55 in 2024, signaling enhanced effectiveness in utilizing assets to generate revenue. This corresponds with the period of accelerated sales growth and indicates better operational performance in recent years.
- Sales (US$ in millions)
- Increased from 47,994 in 2020 to 64,168 in 2024, reflecting strong revenue growth driven by a significant surge between 2021 and 2022.
- Total assets (US$ in millions)
- Expanded from 91,588 in 2020 to 117,106 in 2024, with a peak increase in 2021, a slight decrease in 2023, followed by a recovery in 2024, indicating dynamic asset management.
- Total asset turnover (ratio)
- Dipped from 0.52 in 2020 to 0.46 in 2021, then increased steadily to 0.55 by 2024, suggesting improved efficiency in asset utilization over the latter years.
Equity Turnover
Merck & Co. Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 64,168) | 60,115) | 59,283) | 48,704) | 47,994) | |
| Total Merck & Co., Inc. stockholders’ equity | 46,313) | 37,581) | 45,991) | 38,184) | 25,317) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 1.39 | 1.60 | 1.29 | 1.28 | 1.90 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| AbbVie Inc. | 16.94 | 5.24 | 3.36 | 3.65 | 3.50 | |
| Amgen Inc. | 5.45 | 4.32 | 6.77 | 3.63 | 2.58 | |
| Bristol-Myers Squibb Co. | 2.96 | 1.53 | 1.49 | 1.29 | 1.12 | |
| Danaher Corp. | 0.48 | 0.45 | 0.63 | 0.65 | 0.56 | |
| Eli Lilly & Co. | 3.17 | 3.17 | 2.68 | 3.15 | 4.35 | |
| Gilead Sciences Inc. | 1.48 | 1.18 | 1.27 | 1.28 | 1.34 | |
| Johnson & Johnson | 1.24 | 1.24 | 1.24 | 1.27 | 1.31 | |
| Pfizer Inc. | 0.72 | 0.67 | 1.06 | 1.06 | 0.67 | |
| Regeneron Pharmaceuticals Inc. | 0.48 | 0.51 | 0.54 | 0.86 | 0.77 | |
| Thermo Fisher Scientific Inc. | 0.86 | 0.92 | 1.02 | 0.96 | 0.93 | |
| Vertex Pharmaceuticals Inc. | 0.67 | 0.56 | 0.64 | 0.75 | 0.71 | |
| Equity Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 1.27 | 1.15 | 1.24 | 1.27 | 1.22 | |
| Equity Turnover, Industry | ||||||
| Health Care | 2.10 | 2.00 | 1.97 | 1.91 | 1.89 | |
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).
1 2024 Calculation
Equity turnover = Sales ÷ Total Merck & Co., Inc. stockholders’ equity
= 64,168 ÷ 46,313 = 1.39
2 Click competitor name to see calculations.
- Sales Trends
- Sales demonstrated an overall upward trajectory from 2020 through 2024. Starting at US$47,994 million in 2020, sales marginally increased in 2021 to US$48,704 million, followed by a more significant rise to US$59,283 million in 2022. The growth continued, albeit at a slower pace, with sales reaching US$60,115 million in 2023 and further increasing to US$64,168 million in 2024. The steady increase over five years suggests consistent demand and revenue expansion for the company.
- Stockholders’ Equity Trends
- Stockholders’ equity showed considerable volatility during the observed period. From US$25,317 million in 2020, equity surged to US$38,184 million in 2021 and continued to grow to US$45,991 million in 2022. However, in 2023, equity declined significantly to US$37,581 million before recovering to US$46,313 million in 2024. This fluctuation may indicate variations in retained earnings, dividend policies, capital structure adjustments, or other equity-related events impacting the company’s financial leverage and capital base.
- Equity Turnover Ratio Analysis
- The equity turnover ratio, which gauges the efficiency of equity use to generate sales, fluctuated throughout the period. The ratio was highest at 1.9 in 2020 and then declined sharply to 1.28 in 2021, remaining relatively stable at 1.29 in 2022. In 2023, the ratio improved to 1.6, suggesting enhanced efficiency in generating sales from equity during that year, before declining slightly to 1.39 in 2024. The downward trend from 2020 to 2022 followed by partial recovery suggests changing dynamics in asset utilization or equity management.
- Summary Insights
- Overall, sales growth was robust and consistent, reflecting positively on revenue-generating capabilities. Stockholders’ equity presented notable variability, indicating changes in financial strategy or broader market conditions affecting the company’s capital structure. The equity turnover ratio’s decline and partial recovery highlight shifting efficiency in utilizing equity to drive sales, warranting further examination of operational and financial policies during the respective periods.