Merck & Co., Inc. , the global pharmaceutical company, included the income statements and balance sheets in Exhibit 12-12 in its 2011 annual report. Additional information includes the following:
€¢ Average common shares outstanding of 3,071 million in 2011
€¢ Market price per share of $37.70 at December 30, 2011, the last trading day before its fiscal year-end of December 31, 2011
€¢ Dividends of $1.56 per share were paid on common stock during 2011
€¢ Interest expense in 2011 was $749 million
Compute the following ratios for 2011:
1. Current ratio
2. Quick ratio (use current assets €“ inventories as the numerator)
3. Average collection period (assume all sales are on credit)
4. Total-debt-to-total-assets (define total debt as total liabilities)
5. Total-debt-to-equity (define total debt as total liabilities)
6. Return on common stockholders€™ equity
7. Gross profit rate
8. Return on sales
9. Total asset turnover
10. Return on assets (defined as EBIT divided by average total assets)
11. EPS (basic)
12. P-E ratio
13. Dividend-yield ratio (for common stock)
14. Dividend-payout ratio (for common stock)
15. Market-to-book value
That Merck has noncontrolling interests and the financial statements provide information about both the total enterprise and about Merck after the noncontrolling interests. You will have to make some choices about which numbers to use in calculating ratios. As an example, Return on Sales can only be calculated for the whole enterprise, but return on common stockholders€™ equity should be calculated for the Merck common shareholder after the effect of noncontrolling interests.

CONSOLIDATED STATEMENTS OFEARNINGS

Transcribed Image Text:

For the Years Ended December 31 2011 2010 Sales $48,047 $45,987 Costs, expenses, and other 18,396 13,125 16,871 13,733 8,467 1,306 (610) 946 40,713 7,334 942 6,392 120 $ 6,272 Materials and production Marketing and administrative Research and development Restructuring costs Equity income from affiliates Other (income) expense, net 985 (587) 1,304 44,334 1,653 671 982 121 $ 861 Income before taxes Taxes on income Net income Less: Net income attributable to noncontrolling interests Net income attributable to Merck & Co., Inc