Johnson and Johnson Financial Ratio Analysis

1360 Words6 Pages
Johnson and Johnson is a New Jersey based manufacturer of healthcare products who has 3 divisions:Consumer division which manufactures and markets products related to baby and child care, oral and wound care and women's healthcare. Pharmaceutical division which manufactures and markets products related to cardiovascular health, dermatology, contraceptive and gastrointestinal sickness. Medical devices and diagnostics division which manufactures and markets products for hospitals, diagnostic laboratories and clinics. According to the company's own website, JNJ.com, it has more than 250 Johnson and Johnson operating companies which employs approximately 120,500 men and women in 57 countries and sell products throughout the world. Johnson…show more content…
Cash ratio of Johnson and Johnson is calculated as:2006200520040.2131412771.2772457460.9251095This calculation again shows that in 2004 and 2005 Johnson and Johnson has enough liquid assets to cover liabilities however, in 2006 Johnson and Johnson's ratio dropped to 0.2 showing a decrease in liquid assets. Asset Turnover Ratio calculates the total sales for every dollar of assets a company owns. Asset Turnover ratio of Johnson and Johnson is calculated as:2006200520040.2060114360.2110339540.233057689Johnson and Johnson's asset turnover seems to be relatively low, meaning that it makes a high profit margin on its products. Average Collection Period measures the average number of days customers take to pay their bills, indicating the effectiveness of credit and collection policies of the business. Average Collection Period of Johnson and Johnson is calculated as:20062005200453.8081351750.0055925151.66876109If my calculations are correct Johnson and Johnson is having some problems collecting payments from it's customers and need to implement efficiencies for Accounts Receivable department. Inventory Turnover Ratio shows how many times a company's inventory is sold and replaced. Inventory Turnover ratio of Johnson and Johnson is calculated as:2006200520043.4034810133.6375438143.675395526The high turnover ratio over the years represents strong sales for Johnson and
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