Comment on merck’s earnings trend

Reference no: EM131407971

Refer to the Merck income statement presented at the very beginning of the chapter, and note that the company reported climbing profits of $3.4 billion, $7.9 billion, and $13 billion in 2007, 2008, and 2009, respectively. Restructuring charges rose across the three years; equity income affiliates fell across the three years; and there were two very large non-operating items during the three-year period. In 2007 Merck booked a $4.9 billion charge associated with a litigation settlement, and in 2009 the company booked $10.7 billion in "other income." Discuss how each of these non-operating items influenced the basic accounting equation, and compute Merck's net operating income for the three years. Comment on Merck's earnings trend.

Reference no: EM131407971

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