Johnson and Johnson Executive Summary
The $10,000 investment made into Johnson and Johnson is a good investment to have in your portfolio. This is because of the stable nature of Johnson and Johnson and the growth trend of the company.
Based on the JNJ 10-Ks for the last 5 years ended Jan. 1, 2012, the revenue trend is growing. Revenues have trended favorably from $61,095 in the year ended Jan. 2007 to $65,030 in the year ended Jan. 1, 2012. The company is also operating efficiently showing the more stable aspect of this investment by keeping costs of goods sold at an average percent of 29.94% for the five years ended Jan. 1, 2012.
The company is also well leveraged for growth. A good measure of this leverage is the Debt Ratio, which is a measure of the total liabilities of a company in proportion to the total assets. The Debt Ratio will also expose the risks in the company’s debt-load by revealing the extent of assets that are financed with debt. The debt ratio for JNJ has trended from 2.00 in the year ended Dec. 28, 2008 to 2.01 Jan. 1, 2012 with an increase in the fiscal years ended Jan 2, 2011 and Jan 3 2010 to 2.22 and 2.15, respectively. These ratios show that the company has two assets for every one dollar of a liability the company has thereby showing that the company is financially stable and able to pay the obligations it has.
Johnson and Johnson is also able to generate earnings from it’s invested capital. Return on asset (ROA) is a ratio that describes what earnings are generated from invested capital and is often referred to as return on investment. From the years ended Dec. 28, 2008 through Jan 2, 2011, the company has had a consistent ROA percentage of 15.25%, 12.95%, and 12.96%, respectively. The ROA percentage decreased to 8.51% in the year ended Jan. 1, 2012 because of continued additions of assets through acquisitions that will continue to generate growth in the future.
Market perception is also a valuable indicator when determining sound investments. The price to earnings
Based on the JNJ 10-Ks for the last 5 years ended Jan. 1, 2012, the revenue trend is growing. Revenues have trended favorably from $61,095 in the year ended Jan. 2007 to $65,030 in the year ended Jan. 1, 2012. The company is also operating efficiently showing the more stable aspect of this investment by keeping costs of goods sold at an average percent of 29.94% for the five years ended Jan. 1, 2012.
The company is also well leveraged for growth. A good measure of this leverage is the Debt Ratio, which is a measure of the total liabilities of a company in proportion to the total assets. The Debt Ratio will also expose the risks in the company’s debt-load by revealing the extent of assets that are financed with debt. The debt ratio for JNJ has trended from 2.00 in the year ended Dec. 28, 2008 to 2.01 Jan. 1, 2012 with an increase in the fiscal years ended Jan 2, 2011 and Jan 3 2010 to 2.22 and 2.15, respectively. These ratios show that the company has two assets for every one dollar of a liability the company has thereby showing that the company is financially stable and able to pay the obligations it has.
Johnson and Johnson is also able to generate earnings from it’s invested capital. Return on asset (ROA) is a ratio that describes what earnings are generated from invested capital and is often referred to as return on investment. From the years ended Dec. 28, 2008 through Jan 2, 2011, the company has had a consistent ROA percentage of 15.25%, 12.95%, and 12.96%, respectively. The ROA percentage decreased to 8.51% in the year ended Jan. 1, 2012 because of continued additions of assets through acquisitions that will continue to generate growth in the future.
Market perception is also a valuable indicator when determining sound investments. The price to earnings