Module 05 Project - Proposal and Final Submission

1

Running Header: JOHNSONS AND JOHNSONS

JOHNSONS AND JOHNSONS 2

Module 2

Financial Statements

4/19/2020

INTRODUCTION

One of the factors that investors consider before deciding to invest on the company on the particular company is the performance of the company. There are number of the rations that may be used to determine the performance of the company but liquidity ratios are one of the rations that is commonly used. It is used to determine if the firm is capable of paying its currents obligations comfortably. In the event the firm is struggling paying its obligations, investors consider such venture risky because they may invest on them and finally firm defaults its liabilities. Using balance sheet of the JNJ for two years, we will compare its health status and determine stability of the firm based in the current ratio.

BALANCE SHEET VALUES

Business latest financial statements which were available relates to the period 2018 and 2017.

If the financials are reviewed, the current assets of the business in 2018 stood at: $43,867,000 and the total current liabilities for the period 2018 stood at: $10,991,000.

If the current ratios of previous two years of the business are considered the business current ratio in 2018 stood at 3.99, while the ratio in 2017 stood at 3.84, this clearly reflects that the business has further improved the already well established liquidity position of the business.

CASH FLOW STATEMENT VALUES

The cash flows of the business has been as follows for the consecutive two periods. Which states all the business cash flows related to operating, investing and financing activities for the period.

Description	2018	2017
Operating Activities	22.2 Billion	21.06 Billion
Investing Activities	(3.17 Billion)	(14.87 Billion)
Financing Activities	(18.51 Billion)	(7.67 Billion)
Cash and Cash equivalents at end of year	18.53 Billion	17.78 Billion

The above cashflow synopsis, clearly states the business has improved cash flows in 2018, as there has been positive increased cash flow from the operating activities, has reduced cashflows in the investing activities, and more over has significantly repaid the financings, that’s the reason the business has a lot of cash outflow in that.

The cash equivalents or the free cash flow at the end of period has also improved as compared to last year.

RATIO ANALYSIS

There are three ratio analysis done over the compiled balance sheet data, and which is based over the Current ratio, debt ratio and debt to equity ratio of the business, which states the business liquidity, solvency and capital structuring ratio for the consecutive two years.

The business has massively improved the current ratio from 3.84 to 3.99 in one period.

The debt ratio of the business has improved from 0.59 to 0.58 in 2018, which states the debt is reduced from the business structure.

The debt to Equity has slightly declined in 2018 to 1.56 from 1.61, but this is the very minor difference which the business with such performance indicators is easily expected to come over.

CONCLUSION

Overall Johnson and Johnson has significantly maintained its track record of significant operational and financial performance for the addressed periods, the business has significantly reflected the improved financial performance, with the increase in assets, and reduction in liabilities, moreover has reflected improved liquidity, solvency and profitability ratios and significant cash flows performance for the period.

The business has notable contribution to shareholders investment for the period, and can be considered from the investor point of view as excellent choice to invest the funds and generate sufficient returns.

Appendix: Balance sheet for 2018 and 2017

References Johnson and Johnson. (2019, June 22). Financials JNJ. Retrieved from yahoo finance: Yahoo Finance. (2018). Johnson & Johnson (JNJ) Retrieved June 22, 2019 from: https://finance.yahoo.com/quote/JNJ/balance-sheet?p=JNJ

As Reported Annual Balance Sheet

Report Date12/30/201812/31/2017

CurrencyUSDUSD

Audit StatusNot Qualified2018Not Qualified2017

ConsolidatedYesChange in valueYesChange in value

ScaleThousandsThousands

Cash & cash equivalents18,107,0002%17,824,000-6%

Short-term Investments1,580,000235%472,000-98%

Net Receivables14,098,0005%13,490,00015%

Inventory8,599,000-2%8,765,0008%

Other Current Assets1,483,000225%456,000-42%

Total Current Assets43,867,0007%41,007,000-34%

Long Term Investments517,000-32%758,000-16%

Property Plant and Equipment17,035,0000%17,005,0007%

Goodwill30,453,000-5%31,906,00040%

Intangible Assets47,611,000-11%53,228,00098%

Other Assets11,305,0000%11,318,00017%

Deferred Long Term Asset Charges7,640,0008%7,105,00016%

total long-term assets114,561,000-6%121,320,00047%

Total Assets158,428,000-2%162,327,00012%

Current Liabilities

Accounts Payable7,537,0003%7,310,0006%

Short/Current Long Term Debt2,636,00076%1,499,000-12%

Other Current Liabilities818,000-56%1,854,00091%

Total Current Liabilities10,991,0003%10,663,00011%

Long Term Debt27,687,000-10%30,684,00034%

Other Liabilities34,285,000-5%35,922,00066%

long term liabilities 61972000-7%6660600050%

Minority Interest__

Negative Goodwill__

Total Liiabilities93,202,000-4%97,143,00037%

Stockholder's Equity

Misc. Stocks Options Warrants__

Redeemable Preferred Stock__

Preferred Stock__

Common Stock3,120,0000%3,120,0000%

Retained Earnings106,216,0004%101,793,000-8%

Treasury Stock-49,584,00011%-44,753,0003%

Capital Surplus__

Other Stockholder Equity-15,222,00015%-13,199,000-11%

Total Stockholder Equity59,752,000-1%60,160,000-15%

Total Liabilities and shareholder's equity152,954,000-3%157,303,00011%

Net Tangible assets-18,312,000-27%-24,974,000-220%