Johnson & Johnson company SEC 10-K Paper
Michelle_Michy
Wk6discussionPPT.pptxRenier (Alex) Sudul
University of Maryland University College
ACCT 301: SEC 10-K Presentation
April, 25, 2019
agenda
Company Background
Income Statement
Balance Sheet & Shareholder’s Equity
Statement of Cash Flows
Competitive Market
Conclusion
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Company background
JNJ was founded in 1886 by James Wood Johnson and his brothers Robert and Edward in New Brunswick, NJ.
JNJ is a multifaceted Holding Company with 3 major segments: Consumer products, Medical products, & Pharmaceuticals.
JNJ is the Company’s symbol which is listed on the New York Stock Exchange. As of February 15, 2019, there were 142,029 record holders of common stock of the Company. The final market price for JNJ Common Stock during 2018 and 2017 were: $139.72 and $105.06 respectively.
Income statement (Dollars in Millions Except Per Share Data)
| REVENUE & NET INCOME (in Millions) | COMPREHENSIVE INCOME (in Millions) | ||||
| 2017 | 2016 | 2017 | 2016 | ||
| Net Sales | 77,681 | 74,339 | Net Earnings | 1,300 | 16,540 |
| Cost of Goods Sold | 25,439 | 21,789 | Comprehensive Income | 3002 | 14,804 |
| Gross Profit | 51,011 | 50,101 | |||
| Effective Corp Tax Rate | |||||
| Net Interest Expense | 934 | 726 |
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Income STATEMENT EXPLAINED
Gross profit margin (Sales $81,581m /COGS $27,091m) = 66.79%
Although the Gross Profit was about the same from the previous year. JNJ’s GPM is still substantially high enough to cover their highest operating costs of Marketing and R&D.
11% remains to cover shareholder dividends.
Net profit margin (Net Sales of $15,297m / Revenue of $81,581m) = 18.75%
This tells the investors that out of the $81,581m in sales, 18.75% (or roughly $15, 581m) will be converted to profit.
Times interest earned (EBIT of $19,196m / Interest Exp of $552m) = 34.78 or 35
JNJ’s investors should be happy to know that JNJ is able to pay their interest payments 35 times over. Obtaining additional loans would not be a difficulty because other banks would see that JNJ has the earnings to meet financial obligations.
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BALANCE SHEET & SHAREHOLDER’S EQUITY
| BALANCE SHEET ITEMS(in Millions) | SHAREHOLDER’S EQUITY ITEMS (in Millions) | ||||
| 2018 | 2017 | 2018 | 2017 | ||
| Current Assets | 46,033 | 43,088 | Total Stockholder’s Equity | 59,752 | 60,160 |
| Current Liabilities | 31,230 | 30,537 | |||
| Total Assets | 152,954 | 157,303 | |||
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Balance sheet & Shareholder’s equity cont’d
Quick ratio 2018 data: Quick ratio = current assets/inventory/Current Liabilities
Quick ratio =46,033,000/8,599,000/31,230,000=1.20:1
This ratio measures the dollar for dollar amount of assets for each current liability excluding inventories. It excludes inventories to present a more conservative ratio of liquidity. Even after excluding inventories, JNJ is still able to pay $1.77 in current assets for every $1 of current liabilities.
Debt to assets 2018 data: Debt to assets = Total liabilities / total assets
Debt to assets= 93,202,000 / 152,954 ,000 = 0.61:1
This ratio tells how much of JNJ’s assets have been leveraged by debt. And according to their ratio, 15% of JNJ’s assets have been leveraged by debt.
Return on stockholder's equity (Net Income of $15,409 / Shareholder's Equity of 71,150) = 21.66%
This ratio measures the amount of profit JNJ is able to make with the money the shareholders have invested.
Earnings per share (Net Income of $15,409 / Average Outstanding Common Shares of $3,120) = $4.93
This ratio measures the amount of profit that would be allocated to each of JNJ’s outstanding stock.
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Statement of cashflow
| STATEMENT OF CASH FLOWS Millions) | ||
| 2018 | 2017 | |
| Acquisitions (Net Cash Paid) | 899 | 35151 |
JNJ significantly decreased the amount of money they used for investments from prior year.
Certain businesses were acquired for $0.9 billion in cash and $0.1 billion of liabilities assumed during 2018. These acquisitions were accounted for using the acquisition method and, accordingly, results of operations have been included in the financial statements from their respective dates of acquisition.
The 2018 acquisitions primarily included: Zarbee’s, Inc., a privately held company that is a leader in naturally-based consumer healthcare products; Medical Enterprises Distribution LLC, a privately held healthcare technology firm focused on surgical procedure innovation; BeneVir Biopharm, Inc.
(BeneVir), a privately-held, biopharmaceutical company specializing in the development of oncolytic immunotherapies and Orthotaxy, a privately-held developer of software-enabled surgery technologies, including a differentiated robotic-assisted surgery solution
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