Introduction

Our group had chosen different companies from different industry for short term
investment period, companies chosen were PepsiCo Inc, Johnson & Johnson,
Tesco and Pfizer.my chosen company was Johnson & Johnson which is an
American multinational pharmaceutical and consumer packaged goods
manufacturer. Through this report I would analyse financial statements of
Johnson & Johnson which will help to understand finical condition of Johnson &
Johnson and making investment decision in equity shares of company.
Johnson & Johnson is American MNC, pharmaceutical and consumer packaged
goods manufacturer founded in 1886. Company operates in in 57 countries with
around 250 subsidiary companies, and sales in almost 175 countries. From
investors point of view this report will mainly focus on the financial performance for year from
2011 to 2015.

Financial Analyses
Liquidity Ratio
Current Ratio and quick Ratio: - Current Ratio is one of very important
measurement tool to know companies financial health, it measures companies
ability to pay back its short term debt. The higher is current ratio, more is
company in position to pay its obligations. The quick ratio measures a companys
ability to meet its short-term obligations with its most liquid assets. Its better
way of measuring liquidity of company
Looking into financial report of Johnson & Johnson has seen up and downs in past
few years in quick and current ratio, however both ratio is having value above 1
which shows companies is always in good liquidity condition. Higher current and
quick ratio of company higher will be capability of company to pay back its short
term debts.

Chart I Current Rati and Quick Ratio

Sources: https://www.stock-analysis-on.net/NYSE/Company/Johnson-Johnson

Profitability Ratio
Net profit margin is one of measure used to measure companies profitability, its
ratio of companies net profit to sales. Its always expressed typically in
percentage, it gives idea how much profit a company make of each dollar of
sales. For example if a company have net profit margin of 20% that means every
dollar earned will give 20 cent as profit. Its one of the most important indicators
of a businesss financial health. Net profit include both operating and financial
expenses whereas gross profit include only operating expenses.
For Johnson & Johnson net profit margin is 21.99% for year 2015 which had slight
increase from previous year. Company always had upward trend in net profit
margin from past five year which shows company is in profitable condition.
Comparing Johnson and Johnsons net profit margin with health care industry,
Johnson and Johnson always had higher net profit margin. This shows company
was more efficient in converting its sales into profit.
Chart 2:- Net Profit Margin
Source: https://www.stock-analysis-on.net/NYSE/Company/Johnson-Johnson

Leverage
Debt-to-equity ratio: - Debt/ equity ratio is calculated by dividing companys total
liability to its shareholder equity. Its used to measure companys financial
leverage. The D/E ratio show how much how much debt Company have taken for
financing assets compared to shareholders equity.

Debt-Equity Ratio = Total Liabilities / Shareholders' Equity

Chart 3:- Debit/Equity Ratio

Source: https://www.stock-analysis-on.net/NYSE/Company/Johnson-Johnson
The D/E ratio from Johnson and Johnson is in range of 0.34 to 0.25 in last 5 year
and have a declining trend. This ratio show Johnson and Johnson is low leverage
and less risky company. When compared with average D/E ratio of health care
Industry, Johnson and Johnson is having very low ratio, which company is very

less risky in industry.

Low D/E ratio is better than having high D/E ratio, as it make investment less
risky. However D/E ratio is different of every industry.
From year 2011 where D/E ratio from Johnson and Johnson was .034, it had huge
decrease in 2012 to 0.25 where company had paid back some of long term debt.

Dividend and Dividend yield

A dividend is a distribution of a portion of a company's earnings, decided by the board of

directors, to a class of its shareholders. Dividend is direct benefit in monetary term to
investor. In case of Johnson and Johnson company pay dividend to its shareholders
regularly. Company pay dividend from past 56
Looking at below table which shows dividend history for Johnson and Johnson,
shown strong dividend pay-out for the company. Currently dividend Yield for
Johnson and Johnson is 2.60% which one of highest dividend yield in most of
industry. Looking at records it shows company payout dividend for 56 years.

Table 1:- Dividend History

Source: http://www.streetinsider.com/dividend_history.php?q=jnj
Ex-Div.
Date

Amou
nt

Type

Yield

Chan
ge

Decl.
Date

Rec.
Date

Pay. Date

8/19/201
6

$0.80

Quart
er

2.60
%

N/A

7/18/201
6

8/23/201
6

09-062016

5/18/201
6

$0.80

Quart
er

2.80
%

6.70
%

4/28/201
6

5/20/201
6

06-072016

2/19/201
6

$0.75

Quart
er

2.90
%

N/A

01-042016

2/23/201
6

03-082016

8/21/201
5

$0.75

Quart
er

3.10
%

N/A

7/20/201
5

8/25/201
5

09-082015

5/21/201
5

$0.75

Quart
er

2.90
%

7.10
%

4/23/201
5

5/26/201
5

06-092015

2/20/201
5

$0.70

Quart
er

2.80
%

N/A

01-052015

2/24/201
5

03-102015

11/21/20

$0.70

Quart

2.60

N/A

10/16/20

11/25/20

12-09-

14

er

14

14

2014

8/22/201
4

$0.70

Quart
er

2.70
%

N/A

7/21/201
4

8/26/201
4

09-092014

5/22/201
4

$0.70

Quart
er

2.80
%

6.10
%

4/24/201
4

5/27/201
4

06-102014

2/21/201
4

$0.66

Quart
er

2.90
%

N/A

01-022014

2/25/201
4

03-112014

11/22/20
13

$0.66

Quart
er

2.80
%

N/A

10/17/20
13

11/26/20
13

12-102013

8/23/201
3

$0.66

Quart
er

3%

N/A

7/15/201
3

8/27/201
3

09-102013

5/23/201
3

$0.66

Quart
er

3%

8.20
%

4/25/201
3

5/28/201
3

06-112013

2/22/201
3

$0.61

Quart
er

3.20
%

N/A

01-022013

2/26/201
3

03-122013

11/23/20
12

$0.61

Quart
er

3.50
%

N/A

10/17/20
12

11/27/20
12

12-112012

8/24/201
2

$0.61

Quart
er

3.60
%

N/A

7/16/201
2

8/28/201
2

09-112012

5/24/201
2

$0.61

Quart
er

3.90
%

7%

4/26/201
2

5/29/201
2

06-122012

2/24/201
2

$0.57

Quart
er

3.50
%

N/A

01-032012

2/28/201
2

3/13/201
2

11/25/20
11

$0.57

Quart
er

1.90
%

N/A

10/21/20
11

11/29/20
11

12/13/20
11

8/26/201
1

$0.57

Quart
er

1.90
%

N/A

7/18/201
1

8/30/201
1

9/13/201
1

Chart 4:- Dividend History

Source: http://www.investor.jnj.com/divhistory.cfm
Revenue
Net Sales: - Net sales is one of tool used to analyse companys performance. Net
sales figure will be figures post deducting returns, allowances for damaged or
missing goods and any discounts allowed from gross sales. Its real dollar amount
that company keeps from its sales hence its more accurate figures then gross
sales.

Chart 5:- Net sales

Source: https://www.stock-analysis-on.net/NYSE/Company/Johnson-Johnson
Referring to chart 5, we can see Johnson and Johnson had dip in their sales in
year 2015 compared to last year, however there was growth in net profit margin
which shows companys ability to convert sales into profit. Compared to its

competitors (including Pfizer, Merck and Co., and Eli Lily and Company) Johnson
and Johnson is only company which had growth in net sale and net profit for past
three years. Johnson and Johnson has grabbed major share in each segment
compared to its competitors.
Table 2:- Revenue by segment
Source: https://www.stock-analysis-on.net/NYSE/Company/Johnson-Johnson
Year
Consumer segment
Pharmaceutical segment
Medical Devices segment
Sales to customers

2015
13,507
31,430
25,137
70,074

2014
14,496
32,313
27,522
74,331

2013
14,697
28,125
28,490
71,312

2012
14,447
25,351
27,426
67,224

2011
14,883
24,368
25,779
65,030

Cash Flow Statement

Analyses of cash flow statement is very important for knowing any companys
financial health. Cash flow statement is understanding from where money is
come in and how its being spent. Cash flow statement analyses include analyses
of three component, operating activities, financial activities and investing
activities. However free cash flow is one of most important tool used to measure
its financial health.
Table 3:- Free cash flow
Source: https://www.stock-analysis-on.net/NYSE/Company/Johnson-Johnson
Year
Free cash flow (USD $ in
millions)

2015
13,7
32

2014
14,5
23

2013
20,9
27

2012
14,9
11

2011
24,5
42

Looking at Johnson and Johnson cash flow statement it shows drop in free cash
flow from 2011 to 2015, however cash flow statement is to be analysed with
other performance evolution tools to know its financial health.

Earnings per share and P/E ratio

Table 4:- Earning per share
Year

2015

per share
eps

5.4

2014
5.7

2013
4.81

2012
3.86

2011
3.49

http://www.investopedia.com/
http://www.investor.jnj.com/divhistory.cfm
http://www.nasdaq.com/symbol/jnj/dividend-history
http://www.gurufocus.com/term/per%20share%20eps/JNJ/Earnings%252Bper
%252BShare%252B%252528diluted%252529/Johnson%2B%2526%2BJohnson