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Merck & Company (MRK) 1. Debt and Leverage: Calculate the total debt ratio, debt to equity ratio, equity multiplier, and times interest earned ratio for

Merck & Company (MRK)

1. Debt and Leverage: Calculate the total debt ratio, debt to equity ratio, equity multiplier, and times interest earned ratio for each of the last five years.

2. Analyze the debt/leverage trend (by individual ratio and in total) and determine whether the asset efficiency has been volatile, improved, declined, or stayed the same during this period.

3. Dividend Policy: Calculate the dividend per share amount, dividend yield, payout ratio, and retention ratio for each of the last five years.

4. Analyze the dividend ratio trends and determine the trend (by individual ratio and in total) and determine whether the asset efficiency has been volatile, improved, declined, or stayed the same during this period. Does the company appear to have a specific dividend strategy? If yes, what is it?

5. DuPont Identity: Calculate the DuPont Identity and the ratio components for each of the last five years.

6. Analyze the changes from year to year and determine what factors had the most significant effects on the change in return on equity each year.

Merck & Co., Inc. (MRK)
Summary Balance Sheet
As of December 31st, 2008, 2009, 2010, 2011 and 2012
($000,000)
2009 2010 2011 2012 2013
Assets
Current Assets
Cash & Investments 9,604 8.6% 12,201 11.5% 14,972 14.2% 16,141 15.2% 17,486 16.6%
Accounts Receivable 6,603 5.9% 10,995 10.4% 11,955 11.4% 12,181 11.5% 11,973 11.3%
Inventory 8,055 7.2% 5,868 5.5% 6,254 5.9% 6,535 6.2% 6,226 5.9%
Other Current Assets 4,166 3.7% - 0.0% - 0.0% - 0.0% - 0.0%
Total Current Assets 28,428 25.4% 29,064 27.5% 33,181 31.6% 34,857 32.8% 35,685 33.8%
Net Fixed Assets 18,274 16.3% 17,082 16.1% 16,297 15.5% 16,030 15.1% 14,973
Other Assets
Long Term Investments 432 0.4% 2,175 2.1% 3,458 3.3% 7,305 6.9% 9,770 9.2%
Goodwill 11,923 10.6% 12,378 11.7% 12,155 11.6% 12,134 11.4% 12,301 11.6%
Intangible Assets 47,656 42.5% 39,456 37.3% 34,302 32.6% 29,083 27.4% 23,801 22.5%
Other 5,376 4.8% 5,626 5.3% 5,735 5.5% 6,723 6.3% 9,115 8.6%
Total Other Assets 65,387 58.3% 59,635 56.4% 55,650 52.9% 55,245 52.1% 54,987 52.0%
Total Assets 112,089 100.0% 105,781 100.0% 105,128 100.0% 106,132 100.0% 105,645 100.0%
Liabilities & Equity
Current Liabilities
Accounts Payable 11,691 10.4% 13,241 12.5% 14,255 13.6% 14,033 13.2% 13,347 12.6%
Short/Current Long Term Debt 1,379 1.2% 2,400 2.3% 1,990 1.9% 4,315 4.1% 4,521 4.3%
Other Current Liabilities 2,681 2.4% 0 0.0% 0 0.0% 0 0.0% - 0.0%
Total Current Liabilities 15,751 14.1% 15,641 14.8% 16,245 15.5% 18,348 17.3% 17,868 16.9%
Long Term Liabilities
Long Term Debt 16,075 14.3% 15,482 14.6% 15,525 14.8% 16,254 15.3% 20,539 19.4%
Deferred Long Term Liabilities 18,772 16.7% 17,853 16.9% 16,415 15.6% 16,067 15.1% 14,912 14.1%
Other Liabilities 0 0.0% 2,429 2.3% 2,426 2.3% 2,443 2.3% 2,561 2.4%
Total Long Term Liabilities 34,847 31.1% 35,764 33.8% 34,366 32.7% 34,764 32.8% 38,012 36.0%
Total Liabilities 50,598 45.1% 51,405 48.6% 50,611 48.1% 53,112 50.0% 55,880 52.9%
Stockholders' Equity
Paid in Common Stock 1,781 1.6% 1,788 1.7% 1,788 1.7% 1,788 1.7% 1,788 1.7%
Capital Surplus 39,683 35.4% 40,701 38.5% 40,663 38.7% 40,646 38.3% 40,508 38.3%
Retained Earnings 41,405 36.9% 37,536 35.5% 38,990 37.1% 39,985 37.7% 39,257 37.2%
Treasury Stock (21,044) -18.8% (22,433) -21.2% (23,792) -22.6% (24,717) -23.3% (29,591) -28.0%
Other (332) -0.3% (3,216) -3.0% (3,132) -3.0% (4,682) -4.4% (2,197) -2.1%
Total Stockholders' Equity 61,493 54.9% 54,376 51.4% 54,517 51.9% 53,020 50.0% 49,765 47.1%
Total Liabilities & Equity 112,091 100.0% 105,781 100.0% 105,128 100.0% 106,132 100.0% 105,645 100.0%

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