Merck & Company, Inc. — Earnings Quality Grade F
MRK · Healthcare
Major red flags
Screening Summary
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 66 days, change +8 days YoY
AR growth 14.6% exceeds revenue growth 1.3%
Revenue 1.3%, CFFO -23.3%. Cash follows revenue
Expense Quality
Inventory 9.0% vs COGS 7.8%. Normal
CapEx growth 21.9% is >2x revenue growth 1.3%
SG&A/Gross Profit = 22.1%, excellent (<30%)
Gross margin 74.8%, change -1.5pp. Stable
Cash Flow Quality
CFFO/NI = 0.90. Profits backed by cash
FCF $12.4B, FCF/NI = 0.68
Accruals ratio = 1.3%. Low accruals
Cash $14.6B covers only 30% of debt $49.3B
Balance Sheet Health
Goodwill+Intangibles $48.3B = 92% of equity. Over 50%
Debt/EBITDA = 1.7x. Healthy
Other assets 17.3% vs revenue 1.3%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change 27% YoY. Normal
Manipulation Score
M-Score = -2.27 (< -2.22). Unlikely manipulator
Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-09