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Merck Altman Z-Score

: 4.17 (As of Today)
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Good Sign:

Altman Z-score of 4.17 is strong.

Merck has a Altman Z-Score of 4.17, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Merck's Altman Z-Score or its related term are showing as below:

MRK' s Altman Z-Score Range Over the Past 10 Years
Min: 2.4   Med: 4.48   Max: 12.06
Current: 4.17

During the past 13 years, Merck's highest Altman Z-Score was 12.06. The lowest was 2.40. And the median was 4.48.


Merck Altman Z-Score Historical Data

The historical data trend for Merck's Altman Z-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Merck Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Altman Z-Score
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.10 3.70 3.89 3.26 3.43

Merck Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Altman Z-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.60 3.63 3.43 3.75 4.17

Competitive Comparison

For the Drug Manufacturers - General subindustry, Merck's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Merck Altman Z-Score Distribution

For the Drug Manufacturers industry and Healthcare sector, Merck's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Merck's Altman Z-Score falls into.



Merck Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

Merck's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.0836+1.4*0.5457+3.3*0.1813+0.6*3.6154+1.0*0.5338
=4.17

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Jun. 2022:
Total Assets was $107,095 Mil.
Total Current Assets was $32,116 Mil.
Total Current Liabilities was $23,168 Mil.
Retained Earnings was $58,437 Mil.
Pre-Tax Income was 4487 + 4861 + 3909 + 5266 = $18,523 Mil.
Interest Expense was -240 + -243 + -209 + -196 = $-888 Mil.
Revenue was 14593 + 15901 + 13521 + 13154 = $57,169 Mil.
Market Cap (Today) was $230,579 Mil.
Total Liabilities was $63,777 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(32116 - 23168)/107095
=0.0836

X2=Retained Earnings/Total Assets
=58437/107095
=0.5457

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(18523 - -888)/107095
=0.1813

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=230579.131/63777
=3.6154

X5=Revenue/Total Assets
=57169/107095
=0.5338

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Merck has a Altman Z-Score of 4.17 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Merck  (NYSE:MRK) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Merck Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Merck's Altman Z-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Merck Business Description

Merck logo
Address
2000 Galloping Hill Road, Kenilworth, NJ, USA, 07033
Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm's immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent hepatitis B and pediatric diseases as well as HPV and shingles. Additionally, Merck sells animal health-related drugs. From a geographical perspective, close to half of the firm's sales are generated in the United States.
Executives
Baker Douglas M Jr director 370 WBASHA ST NORTH ST PAUL MN 55102
Oosthuizen Johannes Jacobus officer: SVP, U.S. Market 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Garay Arpa officer: SVP Human Health Global Mktg. 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Downing Cristal N officer: Chief Comm. & Public Afrs Ofcr 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Klobuchar Michael A officer: EVP - Chief Strategy Officer 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Lecointe-cephas Lisa officer: SVP Chief Ethics & Com Officer 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Litchfield Caroline officer: EVP & CFO 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Mayo Stephen director 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Li Dean Y officer: Executive VP & President, MRL 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Williams David Michael officer: EVP,Chief Info&Digital Officer MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Lavizzo-mourey Risa J director GENERAL ELECTRIC COMPANY 5 NECCO STREET BOSTON MA 02210
Seidman Christine E director MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Warden Kathy J director 2980 FAIRVIEW PARK DRIVE FALLS CHURCH VA 22042
Craig Pamela director C/O ACCENTURE 161 N CLARK STREET CHICAGO IL 60601
Brun Leslie A director 435 DEVON PARK DRIVE 700 BUILDING WAYNE PA 19087

Merck Headlines

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