Johnson & Johnson

Johnson & Johnson (JNJ) A report by Renato Ganoza for Managerial Accounting

Why Johnson & Johnson? 

Highly diversified holdings: diversified holdings: over 90 consumer brands and 230 subsidiaries in the “Johnson & Johnson Family of Companies”

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Three revenue streams: consumer products, pharmaceuticals, and medical devices and diagnostics.

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A history of dividends leading back to 1972

Stock Price

(You’re also earning dividends.)

One Month

Six Months

One Year

Five Years

Stock Price

(You’re also earning dividends.)

One Month

Six Months

One Year

Five Years

Ratio Analysis 2006

2008

2010

2012

Payout Ratio

39

39.3

44.1

62.2

Current Ratio

1.20

1.65

2.05

1.90

Quick Ratio

0.67

1.08

1.62

1.34

Debt/Assets Ratio

.05

.10

.16

.18

Revenues

53,324

63,747

61,587

67,224

Operating Income

13,150

15,988

16,527

15,869

Compared to Novartis (NVS)

2011

2012

2011

2012

Inventory Turnover

3.49

3.14

3.16

2.96

Asset Turnover

0.60

0.57

0.49

0.48

Payout Ratio

64.5

62.2

67.5

63.8

(The entire industry looks pretty good.)

Current Events 

“A jury… ordered Johnson & Johnson to pay more than $8.3 million in million in damages to a Montana man in the first of more than 10,000 lawsuits pending lawsuits pending against the medical products maker in connection with a nowrecalled artificial hip.” New York Times, March 8th  2013

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In 2012, legendary investor Warren Buffet “reduced his holdings in Johnson & Johnson by 95.24%.” th

Forbes, November 16  2012

Conclusions 

Hold the stock long-term and reinvest your dividends (or live off the dividend income).

Sources 

Morningstar 

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Yahoo! Finance

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Forbes

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The New York Times

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Johnson & Johnson 2012 Annual Report