This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Christopher Varacchi Sam Kaiser Devon Reilly Katie Clarke Brad Berkowitz Bitter Pill F In September 2004, Vioxx underwent recall and had a significant effect on Merck from a financial perspective. The changes for Mercks financial conditions can be reflected through ratio analysis. The difference between before and after recall will show the changes that took place on the companys financial conditions. Liquidity Ratios: Most companies use two types of liquidity ratios which include current and acid-test. The current ratio for Merck was 1.2 in 2003 and increased to 1.58 in 2005. The acid-test ratio for Merck was .86 in 2003 and 1.40 in 2005. Basically, the increase of cash and cash equivalents was reflected in the ratios by saving money from the recall of their products. Merck obtained the ability to convert assets into cash at a faster level. These ratios show that Merck was not a safe risk for granting short term credit, but will now be able to pay off their short term d measures...
View Full Document
This note was uploaded on 11/02/2010 for the course BUAD 110 taught by Professor Kydd during the Fall '07 term at University of Delaware.
- Fall '07