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financial_reporting_problem_part_1.docFinancial Reporting Problem Part 1 1
Financial Reporting Problem Part 1 8
Financial Reporting Problem Part 1
Dave Lazarus
XACC/290
5/10/14
Marlon Bruce
Financial Reporting Problem Part 1
The purpose of this project is to analysis the financial statements of a publicly traded company. For this purpose we have considered company Johnson & Johnson. After going through the recent annual report of the company we found significant financial information about the company, which is depicted in this report.
Company Profile:
Johnson & Johnson, together with its subsidiaries, is engaged in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The Consumer segment offers a range of products used in the baby care, skin care, oral care, wound care, and women’s health fields, as well as nutritionals, over-the-counter pharmaceutical products, and wellness and prevention platforms under the JOHNSON’S, AVEENO, CLEAN & CLEAR, DABAO, JOHNSON’S Adult, LUBRIDERM, NEUTROGENA, RoC, VENDÔME, LISTERINE, BAND-AID, NEOSPORIN, STAYFREE, CAREFREE, o.b. tampon, SPLENDA, TYLENOL, SUDAFED, ZYRTEC, MOTRIN IB, and PEPCID brand names. This segment markets its products to the general public, as well as to retail outlets and distributors. The Pharmaceutical segment provides various products in the areas of anti-infective, antipsychotic, cardiovascular, contraceptive, gastrointestinal, hematology, immunology, infectious diseases, metabolic, neurology, oncology, pain management, thrombosis, and vaccines. This segment distributes its products directly to retailers, wholesalers, and health care professionals for prescription use. The Medical Devices and Diagnostics segment offers various products to treat cardiovascular disease; orthopedic and neurological products; blood glucose monitoring and insulin delivery products; general surgery, bio surgical, and energy products; professional diagnostic products; infection prevention products; and disposable contact lenses. This segment distributes its products to wholesalers, hospitals, and retailers, used principally in the professional fields by physicians, nurses, hospitals, and clinics. Johnson & Johnson was founded in 1885 and is based in New Brunswick, New Jersey.
Financial Statement Analysis:
At the end of the year 2013 company’s total assets are of $132,683 million. Whereas, in the year 2012 company’s total assets are of $121,347 million. Company becomes wealthier in the year 2013.
Cash and Cash equivalents is an important item in the assets segment of the company’s balance sheet. At the end of the year 2013 the amount of cash and cash equivalents is $20,927 million, whereas the same at the end of the year 2012 was $14,911 million. During the year company has generated $17,414 million from its operating activities. On the other hand $103 million was used by investing activities; $6091 was used by financing activities. Change in exchange rate has also affected company’s cash and cash equivalents adversely by $204. The ultimate effect on cash and cash equivalents is $6016 million positive.
The amount of account payable at the end of year 2013 is $6266 million and the same at the end of year 2012 is $5831 million.
Company’s net revenue for the year 2013, 2012 and 2011 are $71312 million, $67224 million, and $65030 million. Company’s net revenue has increased by $6282 million (9.67%) in the year 2013 over the year 2011.
There is significant growth in the company’s net income. In the year 2013 company’s net income was $13831 million and the same in the year 2012 and 2011 were $10853 million and $9672 million respectively. Thus, company’s net income has increased $2978 million over past three years, which is almost 27.44% of the net income for the year 2011. This growth in the net income shows that company is performing well and giving excellent return to its shareholders.
The amount of company’s total current assets is $56407 million at the end of the year 2013 and the same at the end of the year 2012 was $46116 million. During the year 2013 company’s current assets have increased by 22.32%. This growth is really important for the company’s liquidity point of view. Now, company’s liquidity is more sound and company is able to pay off it short term debts with more surety. Company’s total current assets consist of the following assets: Cash and Cash Equivalents, Marketable Securities, Account Receivables, Inventories, Deferred taxes on income and Prepaid Expenses.
Potential investors would like to know the growth of company’s earning and growth in company’s assets to make informed decision about their investment. They want tm make assure about the good return on their investment and safety of the investments. Company has achieved excellent growth both in income and assets over last three years. Investing in Johnson & Johnson will be a wise decision. To support their investment decision investors can see company’s earnings per share over the past few years. Over the past three years there is significant growth in the company’s EPS. In the year 2011, where the EPS was $3.54 now in the year 2013 the same is $4.92.
Company Johnson & Johnson has performed very well and able to satisfy its shareholders expectations.
References
2. https://in.finance.yahoo.com/q?s=JNJ
