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 womens 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 companys 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 and Johnson was ranked 32nd on the 2006 Fortune 500.
Below is an analysis of Johnson and Johnsons financial ratio analysis:Long Term Debt ratio is a financial leverage is measured by the ratio of long-term debt to total long-term capital.
Long term debt of Johnson and Johnson is calculated as:2006200520040.0487273780.0495248850.07461167This means that in 2004 seven point four cents, in 2005 four point nine cents, in 2006 four point eight cents of every dollar of long-term capital is in the form of long-term debt.
The trend in the long term debt is decreasing which means the company is borrowing less.
Debt Equity Ratio indicates what proportion of equity and debt the company is using to finance its assets.
Debt equity ratio of Johnson and Johnson is calculated as:2006200520040.0512233580.0521053990.080627416The calculated numbers shows that the company is not using too much debt for its operations which means that it uses its earnings to finance all operations.
Total Debt Ratio reveals how much the business is in debt.
Total Debt Ratio of Johnson and Johnson is calculated as:2006200520040.4427405180.3423824410.403323518I can say that Johnson and Johnson is financed 4% with debt and 96% equity.
Times Interest Earned Ratio shows which interest is covered by earnings.
Times Interest Ratio of Johnson and Johnson is calculated as:200620052004231.5396825242.888888965.94117647The calculated numbers shows that Johnson and Johnson is meeting its debt obligations and the company is not facing bankruptcy. Times Interest Ratio does not tell us whether Johnson and Johnson is generating enough cash to repay its debt as it becomes due therefore, I will look at Cash Coverage Ratio below.
Cash Coverage Ratio indicates the ability to pay debt obligations when they become due.
Cash Coverage Ratio of Johnson and Johnson is calculated as:200620052004266.0952381281.648148177.29946524The numbers suggest that there is no sign of bankruptcy for Johnson and Johnson and it is generating sufficient cash to cover its debt obligations.
Networking Capital to Total Assets Ratio roughly measures the reservoir of cash by comparing its current assets to total assets.
Networking Capital Ratio of Johnson and Johnson is calculated...