Cash Flow to Total Liabilities Ratio
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THE PROBLEM:
Calculate the Cash Flow to Total Liabilities Ratio and the Return to Net Operating Ratio
for Johnson and Johnson (2002)
1)
Here are the sites with the financial statements and data:
http://www.jnj.com/2002AnnualReport/financials/consolidated/index.htm
http://www.jnj.com/2002AnnualReport/financials/notes/index.htm
http://www.jnj.com/2002AnnualReport/financials/summary/index.htm
2)
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I have also attached the text pages with the example of how to calculate
the Cash Flow to Total Liabilities Ratio and the Return to Net Operating Ratio
These are initial calculations which I think are incorrect or incomplete:
(please refer to formulas in the two image files and solve
accordingly)
=======================================
Cash flow to total liabilities ratio:
Total Cash on Hand at end of year = 2,894,000,000
Total Liabilities = 17,859,000,000
2,894,000,000/17,859,000,000 = 0.1620 or
Return to net operating ratio:
Net operating margin:
Net operating profit X 100 / net operating revenues
6,597,000,000 X 100/25,851,000,000
=25.0686
Return on total assets:
(Profit before taxation) X 100 / average total assets
9,291,000,000 X 100/40,556,000,000
=22.2984
Return on equity:
(Profit before taxation - taxation) X 100 / average equity
(9,291,000,000 - 2,694,000,000) X 100/22,697,000,000
=29.0268
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In your solution, please make sure you follow the formulas in the two image files
AND tell me where you pulled in each number from.
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Solution Summary
The cash flows to total liabilities ratios are determined. The financial statements and data are analyzed.
Solution Preview
I obtained the following numbers by following the link provided:
http://www.jnj.com/2002AnnualReport/financials/consolidated/index.htm
Here are the calculations:
Cash Flow To Total Liabilities Ratio:
(Revenue - Expense) + Depreciation / Total Liabilities
Total Liabilities:
Total Current Liabilities = 11,449,000
Long Term Debt = 2,022,000
Deferred Tax Liability = 643,000
Employee Related Obligat. = ...
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