Jonhnson and Johnson Company Analysis and Financial Statement

There would still be a net loss in 2006 due to the increase of break-even point, which increased from $7,505 to $8,640.

Liquidity ratios measure the capability of a business to cover expenses and meet its current and long-term responsibility. These ratios are imperative in order to keep the business alive. Lending institutions are typically unwilling to loan money to a business that finds itself in a cash flow jam, because that is often a sign of poor management. The liquidity is measured with 3 different ratios; current ratio, turnover – of – cash ratio and debt- to equity ratio.

1. Liquidity ratios are a class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

From the point of view of the income statement, the current year earnings would decrease by $2.24 million ($11.54million - $9.3 million).

Working capital is the key to a successful business. It is like their blood flow and the manager’s job is to help keep it flowing. Under the Generally Accepted Accounting Principles working capital is simply the difference between a company’s Current Assets, which are cash, inventory, accounts receivable and prepaid items, and Current Liabilities, accounts payable and accrued expenses.

The return on equity (ROE) has also shown an increase in 2009 over the previous year suggesting a successful investment by shareholders. This increase, coupled with the fact that the basic earnings per share (EPS) has increased significantly from 61.78 cents in 2008 to 88.26 cents in 2009 (143%) shows great improvement in the profit per share. Please note that the basic EPS has been used in this analysis as the diluted EPS includes employee options (JBH Annual Report, 2009), skewing and reducing the value of the EPS.

Change in revenue criteria increased both sales and cost of sales by $ 28 Million. The profit margin was decreased from 1.55% to

So while the company increased its net income, it has done so with diminishing profit margins.

Liquidity represents a company’s ability to pay its short-term obligations. In the following schedule is the calculation of the ratios that are indicators of the liquidity position of a company.

Liquidity ratios measure the short term ability of a company to pay its obligations and meet their needs for maintaining cash. According to Cagle, Campbell & Jones (2013), “A good assessment of a company’s liquidity is important because a decline in liquidity leads to a greater risk of bankruptcy” (p. 44). Creditors, investors and analysts alike are all interested in a company’s liquidity. After computing liquidity

During the period 2012 and 2013, the Operating profit margin decreased from 9.2% to 5.7%. This slight decline can be attributed to the decreased revenues and the increase in tax expenses.

From Table 1 above the net income for the 2016 fiscal year is $ 0.897 Billion or $ 897 Million (Amigobulls, 2016), which has drastically dropped from the previous financial year that is 2015 fiscal year which recorded a net income of $ 1.23 Billion (Best Buy, 2015).

Johnson and Johnson is the largest pharmaceutical company in the United States. The World Head Quarter of the company is located at one Johnson and Johnson Plaza in New Brunswick, New Jersey, USA. The company was founded in 1886 by three Johnson bothers; Robert Wood Johnson I, James Wood Johnson, And Edward Mead Johnson. The initial business of the company was to produce antiseptic surgical dressing1. Since then the company has been pioneer in many great pharmaceutical inversions; such as: first aid kit (1888), baby powder (1896), sanitary napkin (1896), dental floss (1898), rH factor (1944) and many more. During 1800’s the company also contributed in natural disasters in Galveston, TX and San Francisco, CA. The legacies of helping community still a big part of the company1. In 1944 the company becomes public and enters the NYSE (New York Stock Exchange). Robert Wood Johnson I, was the first president of the company who served from 1887 to 1910. After that the second Johnson brother, James Wood Johnson took over the presidency of the company and served until 19321. In 1932, Robert Wood Johnson II, the son of Robert Wood Johnson I became the president and served until 1962. Robert Wood Johnson was probably the most futuristic president of the company who was responsible for establishing “The Credo” of the company in 1943 which is still followed by the company very effectively. He also initiated the decentralization of the company as well1. “The

The company is a farmer-owned co-operative with around 5,000 farmer-shareholders. More than 85% of the stock supplied to the company for processing comes from shareholders.

Gross Profit for the financial year ended March 31, 2009 decreased by 511.9 billion yen to 2,581.1 billion yen as compared to the previous year though the cost of sales