Module 05 Project - Proposal and Final Submission

Financial analysis

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Johnson & Johnson is an American organization which was formed three brothers namely, Edward Mead, Robert Wood and James Wood. The organization was started in 1886 with the aim of developing pharmaceutical, medical devices and consumer goods. The organization is based in One Johnson & Johnson plaza, in New Jersey. In the assignment we shall analyze the financial position of the organization in 2017 and 2018 to determine the progress of the organization over the two years (Johnson & Johnson, 2018).

Current ratio

Current ratio 2017 = $43,088 million/ $30,537 million = 1.41

Current ratio 2018 = $46,033 million/ $31,230 million = 1.47

Details	2017	2018
Net Cash Flows from Operating Activities	$21,056 M	$22,201 M
Net Cash used by Investing Activities	($14,868 M)	($3,167 M)
Net Cash used by Financing Activities	($7,673 M)	($18,510 M)
Cash and Cash Equivalents	$17,843 M	$18,107 M

Statement of cash flow

	2017 In million dollars	2018 In million dollars
Net Cash Flows from Operating Activities	21,056	22,201
Net Cash used by Investing Activities	(14,868 )	(3,167 )
Net Cash used by Financing Activities	(7,673 )	(18,510 )
Cash and Cash Equivalents	17,843	18,107

Details	2017	2018
Current ratio	1.41	1.47
Return On Equity	1.99%	25.51%
Dividend yield	2.38%	2.74%
Profit Margin	1.70%	18.75%

The ratios used shows that the organization has a stronger financial in 2018 compared to the financial position in 2017. The current ratio in 2017 was 1.41 while the current ratio in 2018 was 1.47. The profit margin of the firm in 2018 was 18.8% which is a great improvement from the profit margin of 2017 which was 1.7% (Lin, Liang & Chen, 2011). The net income of the organization also increased from $1,300 million in 2017 to $15,297 million which is over 1000% increase. The return on equity also increased from 2% to 25.5%. The increase in the return on equity can be used to attract more investors to boost the net cash of the organization. The total revenue of the organization increased from $76,450 million in 2017 to $81,581 million in 2018. The revenue of Johnson & Johnson increased by 6.7% (Johnson & Johnson, 2018).

References

Johnson & Johnson. (2018). Johnson & Johnson Annual report. Retrieved from file:///C:/Users/user/Downloads/Documents/2018-annual-report_2.pdf

Lin, F., Liang, D., & Chen, E. (2011). Financial ratio selection for business crisis prediction. Expert Systems with Applications, 38(12), 15094-15102.