(1 MARK) SELECTED INCOME STATEMENT AND BALANCE SHEET DATA FROM MERC...

4. - FINANCIAL STATEMENT ANALYSIS MOCK EXAM 4. - FINANCIAL STATEMENT ANALYSIS MOCK EXAM
FINANCIAL STATEMENT ANALYSIS MOCK EXAM

4. (1 mark) Selected income statement and balance sheet data from Merck & Co. for Year 9

are reproduced below:

Required:

a. Calculate return on common equity for Year 9 using year-end amounts and assuming no

preferred dividends.

b. Disaggregate Merck’s ROCE into operating (RNOA) and nonoperating components.

Comment on Merck’s use of leverage. (Assume all assets and current liabilities are operating

and a 35% tax rate.)