After carrying out a ratio analysis of
JNJ , a number of inferences can be drawn. The firm is operating profitably as
the profitability ratios surpass the industrial average. However, the trend is
declining.
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The
company however is not financially stable owing to its low current, quick and
debt ratios. But on the other hand it is effectively utilizing its assets to
generate sales revenue. It has high inventory and accounts receivable turnovers
compared to those of the industrial average.
The management ought to improve the
JNJ’s profitability through a cost reduction mechanism. They also need to
invest in projects that generate positive net present values for the benefit of
the shareholders.
Table of Contents
SNO
TOPIC
PAGE
NUMBER(S)
1
Requirement
3
1
Executive Summary
4
2
Introduction
5
3
Report: Financial Performance Ratios
(2006 &2007)
6-8
4
Critical Evaluation of Ratios
9-14
5
Cost of Capital
15
6
Weighted Cost of Capital
16-17
7
Critical Evaluation of WACC
18
8
Conclusion
19
9
References
20
