Understanding Financial Reports
Introduction In module 2 case study I am to do the following understanding financial reports and continue to review the financial statements of Merck and Novartis to learn additional information. The emphasis of this Case is to review the income statement, balance sheet and computation of ratios. Review the financial statements for the companies and answer the following questions for the last reporting year:
Balance Sheet
• What components of stockholders' equity does each of the companies disclose? o Merck & Company Inc
The components of the stockholders equity common stock (authorized and issued), other paid-in capital, retained earnings, accumulated other comprehensive loss, and treasury stock o Novartis International Ag
The components of the stockholders equity are share capital, treasury shares, reserves, and non-controlling interest.
• Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain? o Merck & Company Inc
Merck has authorized 20,000,000 shares of preferred stock in 2012. All preferred stock from the AMI a merger in 1998 is being converted to either cash or shares of Merck stock.
o Novartis International Ag
Novartis did not report any preferred stock
• Do either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares? o Merck & Company Inc
Yes Merck reported treasury shares; they reported the purchase of treasury shares on the balance sheet in the equity section and also on the summary of common stock and treasury stock transactions. In this case no they didn’t disclose any reasons for reacquiring shares other than those from the merger. o Novartis International Ag
Yes Novartis reported treasury share; No they did not disclose reasons for reacquiring shares
Income Statement
• What are the basic and diluted earnings per share for each company? o Merck & Company Inc
Basic earnings per common stock $2.03
Diluted
Balance Sheet
• What components of stockholders' equity does each of the companies disclose? o Merck & Company Inc
The components of the stockholders equity common stock (authorized and issued), other paid-in capital, retained earnings, accumulated other comprehensive loss, and treasury stock o Novartis International Ag
The components of the stockholders equity are share capital, treasury shares, reserves, and non-controlling interest.
• Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain? o Merck & Company Inc
Merck has authorized 20,000,000 shares of preferred stock in 2012. All preferred stock from the AMI a merger in 1998 is being converted to either cash or shares of Merck stock.
o Novartis International Ag
Novartis did not report any preferred stock
• Do either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares? o Merck & Company Inc
Yes Merck reported treasury shares; they reported the purchase of treasury shares on the balance sheet in the equity section and also on the summary of common stock and treasury stock transactions. In this case no they didn’t disclose any reasons for reacquiring shares other than those from the merger. o Novartis International Ag
Yes Novartis reported treasury share; No they did not disclose reasons for reacquiring shares
Income Statement
• What are the basic and diluted earnings per share for each company? o Merck & Company Inc
Basic earnings per common stock $2.03
Diluted