MCK

Financial health: Fair6/10

6 strengths, 4 concerns. Weakest points: current ratio, return on equity, gross margin and 1 more.

• Debt to equity: -3.00 (Strong, benchmark < 0.5) — Debt of -3.00x equity is conservative against the 0.5x benchmark. It has been broadly flat over the last 4 years.
• Net debt vs cash flow: 0.4y (Strong, benchmark < 4 years) — Net debt of $2.6B is 0.4x annual free cash flow — under a year of cash flow to repay.
• Current ratio: 0.85 (Concern, benchmark > 1.5) — Short-term assets cover only 0.85x short-term liabilities — below 1.0, meaning bills due this year exceed the assets on hand to pay them. It has been broadly flat over the last 4 years.
• Return on equity: -219.2% (Concern, benchmark > 15%) — Earns -219.2% on shareholder equity, well short of the > 15% mark.
• Gross margin: 3.6% (Concern, benchmark > 40%) — Keeps 3.6% of revenue after the direct cost of sales, well short of the > 40% mark.
• Net margin: 1.2% (Concern, benchmark > 10%) — Turns 1.2% of revenue into profit, well short of the > 10% mark.
• Free cash flow: $5.7B (Strong, benchmark positive) — Generated $5.7B of free cash flow after capital spending. It has improved over the last 4 years.
• Revenue growth: 12.4% (Strong, benchmark > 10%) — Revenue changed 12.4% year on year, comfortably past the > 10% mark.
• Earnings growth: 44.5% (Strong, benchmark > 10%) — Earnings changed 44.5% year on year, comfortably past the > 10% mark.
• Payout ratio: 8.0% (Strong, benchmark < 60%) — Pays out 8.0% of earnings as dividends, leaving room to keep paying.