Financial Analysis Report: Johnson & Johnson Company Analysis

This report provides a financial analysis of Johnson & Johnson, focusing on its performance in 2018. It examines key financial ratios, including liquidity, activity, profitability, and leverage. The analysis compares Johnson & Johnson with the Merck Company, highlighting differences in areas such as liquidity, inventory turnover, and profitability margins. The report uses data from investor reports and financial statements to assess the company's financial health, providing insights into its strengths and weaknesses. The analysis covers the company's financial position, including debt-to-equity ratios and asset turnover, offering a comprehensive view of its financial performance. This report is a valuable resource for understanding the financial aspects of Johnson & Johnson and its standing relative to its competitors.

Running head: FINANCIAL ANALYSIS
Financial Analysis
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1FINANCIAL ANALYSIS
Table of Contents
Ratio Analysis..................................................................................................................................2
References........................................................................................................................................3

2FINANCIAL ANALYSIS
Ratio Analysis
The financial analysis of Johnson & Johnson Company was done for the year 2018 in
order to evaluate the changes in the financial position and the financial performance of the
company for the trend period selected.
Liquidity Ratio: In terms of liquidity Merck Company was said to have a better liquidity
position which was around 4.33 times and at the same time the same was around 1.47 times for
the Johnson & Johnson Company.
Activity Ratio: The inventory turnover ratio for the Johnson Company was around 3.15 times
that was comparatively much better than the Merck Company that was having an ratio of 1.95
times. On the other hand the time taken by the Johnson Company in converting the inventory of
the company into total sales was comparatively much better rounding up to 116 days and the
same was around 187 days. The fixed asset turnover ratio for the company was also
comparatively much higher for Johnson Company (Merckgroup.com, 2019).
Profitability Ratio: While assessing the profitability earned by these company on the asset base
the Johnson Company has delivered consistent return. However, when considering from net
profitability margin Merck Company has sound financial performance (Investor.jnj.com, 2019).
Leverage and Coverage Ratio: In terms of leverage that is debt to equity for the Johnson
Company was comparatively much higher than the Merck Company. At the same time the
Johnson Company also had a wide coverage ratio that is total debt to total assets that was around
40% for Johnson and 18% for Merck Company.

3FINANCIAL ANALYSIS
References
Investor.jnj.com (2019). Retrieved 15 August 2019, from http://www.investor.jnj.com/annual-
meeting-materials/2018-annual-report
Merckgroup.com (2019). Retrieved 15 August 2019, from
https://www.merckgroup.com/content/dam/web/corporate/non-images/investors/reports-
and-financials/earnings-materials/2018-q4/en/2018-Q4-Report-EN.pdf