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Johnson & Johnson: Financial Ratios Analysis

Calculate the FINANCIAL & MARKET RATIOS for the year ended 31/12/07 & 31/12/06

Critically evaluate and comment on the results - Spotlight the areas the management should focus more

- Calculate k (cost of equity) by applying both the Gordon's Growth Model and the CAPM.
- Calculate the cost of each component of Capital for JNJ and the weighted cost of capital (WACC)

Then

Review the Financial Management policies and practices of JNJ over the past two years. Visit the website of the company.

Critically evaluate the financial management effectiveness of the company by commenting on:

- working capital policies
- dividend policies
- gearing policies
- risk management policies
- investment

Present your own suggestion on what changes you think might improve these principles.

Solution Summary

This question deals with review of the financial management policies and practices of Johnson and Johnson over the past two years. Also it calculates the important financial ratios including profitability, net profit ratios, ROE, debt ratio, acid ratio, current ratio, quick ratio, cash ratio, average collection days, earning per share, EBIT, cost of capital, EACC.

$2.19