Jonson and Johnson Company Financial History

Income Statement (in Millions)

  2015 2016 2017
Sales for customers 70,074 71,890 76,450
Cost of products sold (21,536) (21,685) (25384)
Gross profit 48,538 50,205 51,096
Selling, marketing and administrative expenses (21,203) (19,945) (21,420)
Research and development  expense (9,046) (9,095) (10,554)
In-process research and development (224) (29) (408)
Restructuring (509) (491) (309)
Operating earnings 17,556 20,645 18,405
Interest income 128 368 385
Interest expense ,net of portion capitalized (552) (726) (934)
Other income(expense)net 2,064 (484) (183)
Earnings before provision for taxes on income 19,196 19,803 17,673
Provision for taxes on income (3,787) (3,263) (16,373)
Net earnings 15,409 16,540 1,300

Key Ratios Table

Margins% of sales 2015 2016 2017
Revenue 100.00 100.00 100.00
COGS 30.73 30.16 33.16
Gross Margin 69.27 69.84 66.84
SG&A 30.26 27.74 28.02
R&D 13.23 12.69 14.34
Others _ _ _
Operating Margin 25.78 29.40 24.48
Net Int Inc. &others 1.61 -1.85 -1.36
EBT margin 27.39 27.55 23.12
Profitability 2015 2016 2017
Tax rate % 19.73 16.48 92.64
Net margin % 12.99 23.01 1.70
Asset turnover (average) 0.53 0.52 0.51
Return of assets  % 11.65 12.05 0.87
Financial leverage (average) 1.88 2.01 2.61
Return on Equity % 21.87 23.37 1.77
Return on invested capital % 17.55 17.86 1.69
       
Interest coverage 35.78 28.28 19.92

 

Discussions

Key Ratios

From the above table, it’s clear that the net fixed turnover improved in from 2015 to 2016 meaning that the firm performance was excellent. However, the net set turnover went down from 2016 to 2017. The total asset turnover continued to deteriorate right from the year 2015 to 2016 as well as 2016 to 2017. Lastly, the equity turnover improved from 2015 to 2016 and 2016 to 2017 respectively.

 

Vertical Analysis on Balance Sheet

Horizontal analysis on Balance sheet

Current Asset

The total current asset for Johnson and Johnson Company increased from $60.21 in 2015 to $65.03 in 2016 this was a difference of $4.82B. However, the trend changed from 2016 to 2017 where the total current asset reduced significantly from $65.05 in 2016 to $43.09 B in 2017, the margin for 2016 and 2017 was $21.94.

Long-term Debt

The long-term debt increased gradually from the year 2015 to 2016 and from 2016 to 2017 as follows. From 2015 to 2016 it rose from $12.86B to $22.44B, the margin was $9.58B and from $22.44 to $30.68 in 2016 to 2017 respectively and the difference was $8.24 respectively.

Horizontal Analysis of the Income statement

Gross Profit

The gross income for Johnson and Johnson Company significantly increased from 2015 to 2016 but increased with a tiny percentage from 2016 to 2017 (Lahmiri 269). In 2015 to 2016 the gross profit rose from $48.538 to $50.205 million with a margin of $1.667million. Additionally, the gross profit rose from $50.205 to $51.096 million, and the difference was $0.846 million from 2016 to 2017.

Vertical Analysis on Income Statement

Operating Earnings

The operating earnings for Johnson and Johnson improved from 2015 to 2016 but decreased from 2016 to 2017. In 2015 to 2016, the operating earnings increased from $17.556 to $20.645 where the margin was $3.089 million. For 2016 to 2017, the operating earnings reduced from $20.645 million to $18.405 and the difference was $-2.24 million.

Work Cited

Lahmiri, Salim. “Features selection, data mining and finacial risk classification: a comparative study.” Intelligent Systems in Accounting, Finance and Management 23.4 (2016): 265-275.

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