The operational performance of our businesses within a certain period provides an important basis for assessing the financial health of our company. In addition, the financial stability of the company is reflected by the following capital market-related parameters:
Net income and earnings per share (EPS)
Earnings per share are calculated by dividing profit after tax attributable to the shareholders of Merck KGaA (net income) by the weighted average number of theoretical shares outstanding. The use of a theoretical number of shares takes into account the fact that the general partner’s capital is not represented by shares. To provide a more comparable view, Merck also publishes EPS pre, which excludes one-time items and amortization of intangible assets (mostly from the acquisitions of Serono SA and the Millipore Corporation) and is based on the company’s underlying tax ratio.
Credit rating
The rating of Merck’s credit worthiness by external agencies is an important indicator with respect to our ability to raise debt capital at attractive market conditions. The capital market makes use of the assessments published by independent rating agencies in order to assist debt providers in estimating the risks associated with a financial instrument. Currently, Merck is assessed by Moody’s and Standard & Poor’s (S&P). Here, net financial debt is an important indicator, which we define as current and non-current financial liabilities less cash and cash equivalents as well as current financial assets. A five-year overview of Merck’s credit rating can be found in the report on risks and opportunities.
Dividend ratio
As a publicly listed company Merck strives to pay a reasonable dividend to shareholders based on the returns that we generate. With the aim of ensuring an attractive return to shareholders, Merck pursues a reliable dividend policy with a target payout ratio based on adjusted net income (reported net income plus one-time items, e.g. restructuring costs).
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