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Merck

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Merck – PowerPoint PPT presentation

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Title: Merck


1
Merck Co., Inc.
  • Financial Analysis Report
  • by
  • Jonathan Caplin
  • Choi Jeoung Hee
  • Zairina Junid

2
Company Introduction
Merck Co., Inc. is a leading research-driven
pharmaceutical products and services company.
 Merck discovers, develops, manufactures and
markets a broad range of innovative products to
improve human and animal health, directly and
through joint ventures.
  • Propecia treats male pattern baldness
  • Zocor treats high cholesterol
  • Crixivan used for treatment of HIV
  • Proscar treats prostrate growth
  • Maxalt treats migraine headaches
  • Singulair treats asthma

3
Financial Introduction
  • Income Statements
  • Balance Sheets
  • Cash Flow and Ratio Comparisons

4
Income Statements
Sales Gross Margin Expenses Net Income
5
Income Statement Trend Analysis
Fiscal year ended 1998 1999 2000 2001
Net Sales 100 121.62 150.06 177.39
Less Cost of Goods Sold 100 100.00 161.17 208.08
Gross margin 100 117.01 138.13 144.45
Less Operating expenses 100 155.22 189.15 192.60
Income from operations 100 95.42 109.30 117.23
Other revenues expenses 100 -458.05 -492.85 -441.95
Income before tax 100 105.98 120.79 127.90
Income Tax expense 100 94.60 104.07 108.18
Income before Nonrecurring items 100 112.24 129.98 138.75
Net income (loss) 100 112.24 129.98 138.75
6
Income Statement Trend Analysis - Net Sales
In millions
1998 1999 2000 2001
Net Sales 26898.20 32714.00 40363.20 47715.70
7
Common Size Income Statement
8
Income Statement Trend Analysis - Gross Profit
In millions
1998 1999 2000 2001
Gross Profit 12972.80 15179.80 17919.70 18739.20
9
Income Statement Common Size Analysis
10
Income Statement Trend Analysis - Operating
Expenses
In millions
1998 1999 2000 2001
Operating Expenses 4684.50 7271.20 8860.50 9022.50
11
Income Statement Common Size Analysis
12
Income Statement Trend Analysis - Income from
Operations
In millions
1998 1999 2000 2001
Income from operations 8288.30 7908.60 9059.20 9716.20
13
Income Statement Common Size Analysis
14
Income Statement Trend Analysis - Net Income
In millions
1998 1999 2000 2001
Net Income (loss) 5248.20 5890.50 6821.70 7281.80
15
Income Statement Common Size Analysis
16
Profitability Ratios
  • Return on Sales
  • Return on Assets
  • Return on Stockholders Equity

17
Ratio Analysis
  • Rate of Return on Net Sales Measures the
    proportion of each sales dollar in profits

18
Ratio Analysis
  • Return on Assets measures how effectively assets
    are used to generate income for shareholders

19
Ratio Analysis
  • Return on Equity measures how effectively
    amounts invested by shareholders are used to
    generate income

20
Balance Sheets
  • Trend Common Size Analysis
  • Total assets
  • Total Liabilities
  • Contributed Capital
  • Retained Earnings

21
Balance Sheets
Year ended 1998 1999 2000 2001
Current asset 10,228.50 11,259.20 13,597.90 12,961.60
PPE, net 7,843.80 9,676.70 11,482.10 13,103.40
Other assets 13,781.10 14,699.00 15,074.90 17,941.70
Total assets 31,853.40 35,634.90 40,154.90 44,006.70
Current liabilities 6,068.80 8,758.80 9,954.10 11,544.20
Long term liabilities 12,982.80 13,634.50 15,368.40 16,412.40
Contributed capital 5,644.20 5,950.20 6,295.50 6,937.00
Retained earnings 20,186.70 23,447.90 27,363.90 31,489.60
Treasury stock and other SE -13,029.10 -16,156.50 -18,827.00 -22,376.50
Total liabilities Stockholders equity 31,853.40 35,634.90 40,154.90 44,006.70
22
Trend of Total Assets

23
Trend of Total Liabilities
24
Trend of Contributed Capital
25
Trend in Retained Earnings
26
Common of Total Liabilities
27
Common Contributed Capital
28
Common Retained Earnings
29
Summary
30
Current Ratio
31
Acid-Test Ratio
32
Debt Ratio
33
Statement of Cash Flows
  • Total Operating Activities
  • Investing Activities
  • Financing Activities

34
Statement of Cash Flows
  • Net cash inflows from operating activities ( in
    millions)

35
Statement of Cash Flows
  • Net cash outflows from investing activities ( in
    millions)

36
Statement of Cash Flows
  • Net cash outflows from financing activities ( in
    millions)

37
Quality of Earnings
38
Statement of Cash Flows
  • Net change in cash and cash equivalents ( in
    millions)

39
Ratio Analysis
  • Current Ratio A measure of short-term liquidity.

40
Ratio Analysis
  • Debt Ratio Measures the proportion of assets
    financed by debt

41
Ratio Analysis
  • Rate of Return on Net Sales Measures the
    proportion of each sales dollar in profits

42
Ratio Analysis
How is this possible that Merck lags behind the
industry average for rate of return on net sales
yet still has positive cash inflows
from operating activities?????
43
Ratio Analysis
  • Inventory Turnover Ratio Measures how quickly
    inventory is sold

44
Ratio Analysis
  • Dividend Yield Market value returned to the
    shareholder

45
Ratio Analysis
  • Days sales in receivables Measures how quickly
    accounts receivable are collected short term
    liquidity.

46
Ratio Analysis
  • Price/Earnings Ratio An indicator of the market
    price per share of stock

47
Ratio Analysis
48
Ratio Analysis
49
In Summary
  • Recommendation to buy this
  • stock
  • Companys trend on profitability
  • performing well
  • Companys trend on solvency
  • significant expansion
  • Companys trend on cash flows
  • favorable trend
  • Companys trend on ratio analysis
  • - huge turnover ratio

50
Merck and Co.
Thank you for coming!
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