The company has 28
B in debt with debt to equity (D/E) ratio of 1.06, which is OK given its current industry classification. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Merck has an asset utilization ratio of 47.24 percent. This signifies that the company is making $0.47 for each dollar of assets. An increasing asset utilization means that Merck Company is more efficient with each dollar of assets it utilizes for everyday operations.
Merck financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Merck, including all of Merck's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Merck assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Merck debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
Understanding Merck Total Liabilities
Merck Company liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Merck Company has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Merck balance sheet include debt obligations and money owed to different Merck vendors, workers, and loan providers. Below is the chart of Merck short long-term liabilities accounts currently reported on its balance sheet.
You can use Merck Company
financial leverage analysis tool to get a better grip on understanding its financial position
How important is Merck's Liquidity
Merck
financial leverage refers to using borrowed capital as a funding source to finance Merck Company ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Merck financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Merck's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Merck's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Merck's total debt and its cash.
A Deeper Perspective
The recent indifference towards the small price fluctuations of Merck Company may encourage traders to take a closer look at the firm as it closed today at a share price of
77.63 on
6,824,952 in trading volume. The company directors and management did not add any value to Merck Inc investors in
July. However, most investors can still diversify their portfolios with Merck Company to hedge their inherited risk against high-volatility market scenarios. The stock standard deviation of daily returns for 30 days investing horizon is currently 1.54. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.
Asset Breakdown
| Total Assets | 85.96 Billion |
| Current Assets | 27.18 Billion |
| Assets Non Current | 58.77 Billion |
| Goodwill | 34.61 Billion |
| Tax Assets | 5.31 Billion |
Merck is epected to finish above $77 in August
The total risk alpha is down to -0.17 as of today. Merck Company exhibits very low volatility with skewness of -0.35 and kurtosis of 1.33. However, we advise investors to further study Merck Company technical indicators to make sure all market info is available and is reliable.
Our Final Perspective on Merck
Although some firms under the drug manufacturers—general industry are still a bit expensive, Merck may offer a potential longer-term growth to traders. With a relatively neutral outlook on the recent economy, it is better to hold off any trading of Merck as the current risk-reward utility is not appealing enough. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Merck.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Merck Company. Please refer to our
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