ipl-logo

Merck Case Study

996 Words4 Pages

Merck & Co.

Merck & Co., founded in 1891 as the United States subsidiary of the German company Merck, is a pharmaceutical manufacturer headquartered out of Kenilworth, NJ, with approximately 68,000 employees. As a cornerstone of the pharmaceutical industry, Team Eight chose Merck & Co. for our case study to understand the financial decisions of a successful industry giant. We will be providing an analysis of the following subjects:

•Cash flow for 2016

•Differences between cash flow and net income

•Outlook based on current financial statements

•The key risks the company faces for future success

Merck’s FY2016 income statement, statement of cash flows, and balance sheet are attached in the appendix for reference.

Merck & Co’s …show more content…

If all the sales, expenses, and activities remain the same for FY2017, the company will lose approximately 2 billion in total cash. Since the company is starting FY2017 with 6.5 billion, the company will be able to maintain operations for the year leaving them with 4.5 billion at the end of next year.

No, there is a possibility of increased sales from the release of their cutting-edge cancer drug. The combination of this increasing their income with the company’s liabilities remaining consistent, an influx of cash to maintain their current operations is not needed. The outlook doesn 't show, but with the new cancer drug coming to market, Keytruda, they have the potential to significantly increase sales.

$10,376 - $1,614 - $5,124 = $3,638 Free cash …show more content…

Similarly, the quick ratio, calculated as 1.24, shows that Merck’s liquid assets surpass their liabilities, demonstrating their ability to pay off its short-term financial liabilities. The difference between the current ratio and quick ratio is that the quick ratio does not take into account the company 's inventory. They will have enough money to pay their current liabilities for the next year.

Key Risks to Company’s Bottom Line

Merck & Co. is in a competitive market with many risks that could affect its profit margin. With the ever-changing landscape of the pharmaceutical industry, the following issues may play a significant role in the company’s future:

•The company is dependent on its patent rights, and if its patent rights are invalidated or circumvented, its business would be adversely affected. This would greatly decrease sales as other companies would be able to produce and sell the drug.

•Key products generate a significant amount of the company’s profits and cash flows, and any events that adversely affect the markets for its leading products could have a material and negative impact on results of operations and cash

Show More
Related

  • Nurofen Specific Pain Case

    563 Words  | 3 Pages

    Relevant Facts: Nurofen, the pain-relief medication is made by Reckitt Benckiser Australia, a multinational company. The company was found misleading customers for all its specific range that contained the same active ingredient ibuprofen lysine 342mg and was seen to have same effect. The product was advertised the products as been targeting back pain, period pain and tension headaches. The Company was fined $1.7m for misleading customers on range of ‘specific pain’ relief contravening Australian Consumer Law has been brought forward by ACCC. The ACCC had asked federal court to impose $6 million fine.

    Read More

  • Massachusetts Stove Company Case Study

    1064 Words  | 5 Pages

    Their current ratio improved from 1.59 to 2.44 which shows the ability to cover current liabilities has improved. Massachusetts Stove Company strategically made decisions to not only increase their current assets quickly but also managed their liabilities to keep them from growing out of control. This means that the company could cover current liabilities at any time relatively easily with their cash, receivables, or other current assets. In terms of the market, Massachusetts Stove Company does have the demand of 220,000 active prospects they could try to sell stoves too if a dire need arose for quick cash. Management even brought their quick ratio to 1.08.

    Read More

  • Verizon Cash Flow Statement

    627 Words  | 3 Pages

    For example, Verizon has increasing number of common stock. It was $424,000. Also, retained earning increased about 27%. Cash flow Statement Net cash provided by operating activities during 2014 decreased by $8.2 billion because increase in adjustment to net income like increase in income tax payments and interest payments.

    Read More

  • Austin As A Lobbyist Essay

    1177 Words  | 5 Pages

    A look at how one man and his backing help keep an entire pharmaceutical company in the position of running a monopoly. This man is named

    Read More

  • Swot Analysis Of Stryker Corporation

    965 Words  | 4 Pages

    Introduction Homer Stryker, an orthopedic surgeon, founded Stryker Corporation after World War II. Stryker Corporation was established to create new medical tools and improved medical procedures for patients to help them heal faster and more efficiently. In order to sustain their twenty percent rate of return, and to generate continuous growth and innovation, Stryker relies heavily on acquisitions. One of Stryker’s more notable and largest acquisitions was Howmedica worth $1.65 billion. Large acquisitions can be risky, so we will access Stryker Corporations industry factors and explain why their detailed capital expenditure process works.

    Read More

  • Janmar Coating Case Analysis

    2638 Words  | 11 Pages

    Janmar Coatings, Inc. In-Depth Case Analysis Prepared by: Elliot Thome In partial fulfillment of the requirements of Marketing Management and Policies Submitted February 26th, 2015 Case Synopsis In early January 2005, Ronald Burns, president of Janmar Coatings, Inc., and his senior management executives were faced with the issue of deciding where and how to deploy corporate marketing efforts among the various markets served by the company.

    Read More

  • Mdelic Wasatch Outerwear Case

    1376 Words  | 6 Pages

    The purpose of this assignment is to give a close attention to the financial perspective of the Mdelic Wasatch Outerwear as we examine past and current financial data and evaluate company's performance and financial position. In order to evaluate a company, we need to go beyond the numbers mentioned in financial statements. Investors, managers, creditors and others need to analyze various aspects of financial statements so they can invest, manage and do business more effectively with the particular company. Analyzing the company’s financial statement helps in evaluating performance of the company that further helps in making smart decisions. Also, to accurately analyze the performance of the company, we need to compare its performance

    Read More

  • Gemini Electronics: Financial Analysis

    1341 Words  | 6 Pages

    This means that every dollar of current liabilities is backed by just over $2.50 worth of current assets, which is a positive for any business. Gemini’s Quick Ratio has barely changed

    Read More

  • Johnson & Johnson Value Chain Analysis Summary

    942 Words  | 4 Pages

    Johnson & Johnson currently has a 10.4% market share of the Pharmaceutical Manufacturing industry. They have the second largest share of this industry, just behind Amgen at 10.9%. By looking at the revenue and operating income for Johnson & Johnson, we can see their margins and evaluate their performance. Johnson & Johnson’s operating profit margin improved from 2015 to 2016 but decreased significantly from 2016 to 2017. The operating profit margin for the company as a whole in 2016 was 28.72% and in 2017 it was 24.07% (Appendix A).

    Read More

  • Grandma's Best Swot Analysis

    984 Words  | 4 Pages

    Their current ratio is 1.4% (total current assets/total current liabilities). According to the Risk Management Association of Financial Ratio Benchmarks, the current average ratio is 1.5%. In 2014, the current ratio for the firm was 1.46% while the average ratio in the industry (NAICS 311330) was 1.6%. The company’s net property and equipment in 2015 is worth 2.6 million dollars, a slight increase from 2014, which was 2.3 million. The company is considering taking on some debt to increase their production capabilities.

    Read More

  • Eastman Kodak Essay

    1915 Words  | 8 Pages

    Often the work conducted in Kodak’s research labs related to digital technology was left unappreciated by other by the rest of the company who still believed in silver halide film as the industry standard. Kodak also faltered in its ability to put its acquisitions to use. In addition to some questionable acquisitions, Kodak’s shear inability to convert the acquired technical expertise to successful knew products proved many of its acquisitions to be a waste of time and resources. As an example, Sterling Drug was acquired in 1988 by Kodak for $5.1 billion. The company was purchased solely because the Kodak managerial team felt that the pharmaceutical industry was at its core a chemical business like itself.

    Read More

  • Sunflower Nutraceuticals Case Study

    1937 Words  | 8 Pages

    Growth and Value Creation at Sunflower Nutraceuticals Sunflower Nutraceuticals (SNC) is a nutraceuticals distributor based in Miami, Florida. Prior to 2012, SNC had flat annual sales growth with total revenues of $10 million and had been experiencing financing issues due to its thin margins and high working capital intensity. Miami Dade Merchant’s Bank (MDM) was SNC’s previous financier, but refused to increase SNC’s line of credit of $3.2 million, which was limiting SNC’s ability to grow because of the working capital constraints. In 2012, SNC decided to accept an alternative financing option from Averell & Tuttle (AT), an investment bank. AT provided SNC with a line of credit of $3.7 million at a 10% interest rate for a 10% equity stake.

    Read More

  • Porter's Five Forces In The Pharmacy Industry

    1156 Words  | 5 Pages

    Threat of substitutes (low): This is one of the great advantages of the pharma industry. Because the demand for pharma products continues and the industry flourish. One of the main reasons for high competitiveness in the field is that it is an ongoing

    Read More

  • My Reflection On Medication History

    831 Words  | 4 Pages

    One of many important aspects of a medication history is determining how knowledgeable a patent is about their medications and their disease states. For the medication knowledge I feel that this means that the patient can identify which drug treats which disease state, how to correctly use the drug and how often, and when to get help if experiencing side effects or if

    Read More

  • Porter's Five Forces Analysis Pharmaceutical Industry

    720 Words  | 3 Pages

    With more drugs going off - patent, growth opportunities for the industry are expected to increase dramatically as generic

    Read More

More about Merck Case Study

Open Document