Merck & Co. Inc. and Novartis International AG



Merck & Co. Inc. and Novartis International AG

Components of Stock holder Equity

The Merck Inc has disclosed the following components of stockholder equity:

Common stock

Paid in capital

Retained Earnings

Other comprehensive Loss

Treasury stock

Non controlling interest

The Novartis AG has disclosed the following components of stockholder equity:

Share Capital

Treasury shares

Issued shares capital and reserve attributable to Novartis

Non controlling interest

Preferred Stock

Merck Inc possesses preferred stock that has a convention of 6% being convertible. This is a mandatory conversion condition associated to preferred stock holding of the company. Since the preferred stock was not convertible in 2010 as a result of a merger therefore, it was automatically converted and holders got the right to receive share and cash out of Merck's common stock. The company paid about $72 million in cash to the preferred stock holders and issued around 4 million of common stock shares as an outcome of these conventions or privileges associated to preferred stock ((Merck Inc, 2012).

Treasury Stock

Merck and Novartis both have treasury stocks listed as an equity related item on balance sheet. The treasury stock of Merck accounts for 550,468221 shares of $24717 in 2012. Novartis also has issued 285572826 treasury shares in 2012 for $ 125 million in 2012. Novartis exchanged these treasury shares as a result of merging with Alcon. Merck and Novartis both have kept the treasury stock for having a controlling interest in order to combat hostile takeovers and use the excessive stock for exchanging purposes in the event of acquisitions and mergers (Novartis AG, 2012).

Income Statement

The basic and dilated earning per share of Merck Inc is given below:

Basic EPS = $2.03 in 2012 and $2.04 in 2011

Diluted EPS = $2 in 2012 and $2.02 in 2011

The basic and dilated earning per share of Novartis AG is given below:

Basic EPS = $3.93 in ...