Johnson & Johnson's Financial Statement Analysis
For this project you will be completing a financial statement analysis for Johnson & Johnson. All the materials that you will need in order to be able to conduct this analysis will be available to you on Brightspace. This project is due by 11:59 PM EST on April 1, 2022. You will be submitting a 4-5 page written paper (in PDF format), along with a spreadsheet (using the provided template) with: 1. The following financial statements for the firm (each in its own tab of the spreadsheet) a. 2021 Balance Sheet (this will include data from the 2019 Balance Sheet that you manually add) b. 2021 Income Statement c. 2021 Statement of Cash Flows 2. Ratio Analysis (in a separate tab on the spreadsheet) Please complete all calculations in your spreadsheet. You MUST use cell references. Points will be deducted for students not using Excel for calculations. Clearly label all worksheets in your spreadsheet so I can easily follow your work. Your written paper should include a brief introduction and conclusion and answer the questions below, using the calculations in your spreadsheet for support. Clearly state which items in your spreadsheet you are referring to in your paper (use the column letter and row number). Your written paper should include responses to the questions below. You should discuss and explain your financial analysis of Johnson & Johnson in your paper. Any assumptions must be clearly discussed in your paper. Using the financial statements of Johnson & Johnson, answer the following questions (your response must be clearly written in your paper)
Financial Statement Analysis
Author
Affiliation
Course
Instructor
Due Date
Johnson & Johnson Financial Analysis
Johnson & Johnson is an American company founded in 1986 with its headquarters in New Jersey. The company develops and sells medical devices, drugs, pharmaceuticals, consumer goods. Johnson & Johnson's latest and biggest breakthrough is the development of the coronavirus vaccine (Johnson & Johnson, 2022). Johnson & Johnson's vaccine was unique from the other vaccine because it was a single-dose vaccine; unlike its counterparts such as Moderna, Pfizer, etc., Johnson & Johnson’s shares for part of the Dow Jones Industrial Average index. It is ranked at position thirty-six in the Fortune 500. The company is highly valuable and has exceptional credit ratings (Johnson & Johnson, 2022). The current Chief Executive Officer of the company is Joaquin Duato, who acts as the Chairman (Ozaist, 2022). The major products that can be identified with the company include first aid kits, bandages, Johnson's Baby products, Janssen Pharmaceuticals, etc. The company seems to be doing well financially as the financial statements reveal steady growth in sales and profits. The balance sheet of the company also suggests a healthy financial position. Our study shall explore the company's financial statements, looking into its performance. Since the company has a steady income and a healthy balance sheet, the company can pursue lease or hire purchase options, issue debentures, or preferred stocks as external financing options.
Income statement
Common Size Income Statement
Period Ending:
2021
2020
2019
2018
2021
2020
2019
Revenue
93,775
82,584
82,059
81,581
1
1
1
Cost of Revenue, Total
29,855
28,327
27,456
26,986
31.84%
34.30%
33.25%
Gross Profit
63,920
54,257
54,603
54,595
68.16%
65.70%
66.12%
Total Operating Expenses
70,999
66,087
64,731
63,582
75.71%
80.02%
78.38%
Selling/General/Admin. Expenses, Total
23,559
21,084
22,178
22,540
25.12%
25.53%
26.86%
Research & Development
14,714
12,159
11,355
10,775
15.69%
14.72%
13.75%
Interest Expense (Income) - Net Operating
(370)
(410)
(183)
394
-0.39%
-0.50%
-0.22%
Unusual Expense (Income)
5,141
5,428
1,456
1,826
5.48%
6.57%
1.76%
Other Operating Expenses, Total
(1,900)
(501)
2,469
1,061
-2.03%
-0.61%
2.99%
Operating Income
22,776
16,497
17,328
17,999
24.29%
19.98%
20.98%
Net Income Before Taxes
22,776
16,497
17,328
17,999
24.29%
19.98%
20.98%
Provision for Income Taxes
1,898
2,083
2,209
2,702
2.02%
2.52%
2.67%
Net Income After Taxes
20,878
14,414
15,119
15,297
22.26%
17.45%
18.31%
Net Income Before Extraordinary Items
20,878
14,414
15,119
15,297
Total Extraordinary Items
-
300
-
-
Net Income
20,878
14,714
15,119
15,297
Income Available to Common Excluding Extraordinary Items
20,878
14,414
15,119
15,297
Diluted Net Income
20,878
14,714
15,119
15,297
Diluted Weighted Average Shares
2,674
2,671
2,684
2,729
Diluted EPS Excluding Extraordinary Items
8
5
6
6
DPS - Common Stock Primary Issue
4
4
4
4
Diluted Normalized EPS
10
7
8
7
Dividends Paid: →
$11,638.76
Payout Ratio: →
4.35
The income statement reveals a steady income growth in the past three years. Revenue improved from $82,584 million in 2020 to $93,775 million in 2021. The Cost of Goods Sold (COGS) has an average of 33.13 percent of the revenue. The average percentage of COGS guided our 33.13 percent in estimating the COGS sold for 2022. Similarly, the net operating expense average was 78 percent which informed the assumption of a similar percentage on the total operating expenses. Consequently, operating profit is assumed to be 21 percent based on the 3-years average. Moreover, the computation of dividends paid was guided by the cash dividend payment from the cash flow statement over the past three years. A growth rate of one percent was observed, and as a result, the dividends of 2022 were based on a one percent growth from the previous year.
Balance sheet
Period Ending:
2021
2020
2019
2018
Common Size Balance Sheet
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