Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
Introduction
Johnson & Johnson, through its operation companies, is the world’s most comprehensive and broadly based manufacturer of health care products, as well as a provider of related services, for the consumer, pharmaceutical, and medical devices and diagnostics market. The more than 200 Johnson & Johnson operating companies employ approximately 115,000 men and women in 57 countries and sell products throughout the world.
Consumer
Major franchises-skin and hair care, sanitary protection, wound care, oral care, baby care and nonprescription drugs
ex) JOHNSON’S BABY, BAND-AID, NEUTROGENA,
CLEAN & CLEAR, TYLENOL, etc
Business segments
2. Medical devices and Diagnostics
Johnson & Johnson’s operating companies’ product lines include surgical implants, instruments, needles and sutures: blood glucose monitoring system, wound closure device: endoscopic instruments: orthopaedic products for joint repair and replacement and for correcting spinal deformities: contact lenses:
clinical chemistry systems: medical devices, including cardiovascular monitoring: shunts: coronary and biliary stents: diagnostics used in physicians’ offices and laboratories for identification of diseases such as hepatitis C.
ex)ACUVUE, PROLENE, CYPHER, etc
3. Pharmaceutical
Johnson & Johnson’s operating companies develop products for family planning: psychiatry, mental illness and diseases of the nervous system: gastroenterology: oncology: immunotherapy: cardiovascular disease: dermatology: pain management: allergy: antifungals: anti-infectives: anti-histamines and antiparasitic drugs: and biotechnology-derived products.
ex)NIZORAL, SPORANOX, RISPERDAL(Janssen)
Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
<Income Statement>
Financial Statement
<Balance Sheet>
Financial Statement
<Cash Flow>
Financial Statement
Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
Common Size
2004
2003
25,997
27,320
25,268
22,995
$53,317
$48,263
(Dollars in Millions )
Total
2003
2004
Total
Long-Term
Assets
Total
Current
Assets
Series1
Total Current assets Total Long-Term assets 27320.000000 25997.000000
Series1
Total Current assets Total Long-Term assets 22995.000000 25268.000000
Vertical Analysis(Dollars in Millions )2004Percent2003PercentSales to customers47,348100.0%41,862100.0%Cost of products sold13,42228.3%12,17629.1%Gross profit33,92671.7%29,68670.9%Selling, marketing and administrative expenses15,86033.5%14,13133.8%Research expense5,20311.0%4,68411.2%Purchased in-process research and development180.0%9182.2%Interest income(195)-0.4%(177)-0.4%Interest expense, net of portio.
IntroductionFinancial StatementEvaluation of the Perform.docx
1. Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
Introduction
Johnson & Johnson, through its operation companies, is the
world’s most comprehensive and broadly based manufacturer of
health care products, as well as a provider of related services,
for the consumer, pharmaceutical, and medical devices and
diagnostics market. The more than 200 Johnson & Johnson
operating companies employ approximately 115,000 men and
women in 57 countries and sell products throughout the world.
Consumer
Major franchises-skin and hair care, sanitary protection, wound
care, oral care, baby care and nonprescription drugs
ex) JOHNSON’S BABY, BAND-AID, NEUTROGENA,
CLEAN & CLEAR, TYLENOL, etc
Business segments
2. Medical devices and Diagnostics
2. Johnson & Johnson’s operating companies’ product lines
include surgical implants, instruments, needles and sutures:
blood glucose monitoring system, wound closure device:
endoscopic instruments: orthopaedic products for joint repair
and replacement and for correcting spinal deformities: contact
lenses:
clinical chemistry systems: medical devices, including
cardiovascular monitoring: shunts: coronary and biliary stents:
diagnostics used in physicians’ offices and laboratories for
identification of diseases such as hepatitis C.
ex)ACUVUE, PROLENE, CYPHER, etc
3. Pharmaceutical
Johnson & Johnson’s operating companies develop products for
family planning: psychiatry, mental illness and diseases of the
nervous system: gastroenterology: oncology: immunotherapy:
cardiovascular disease: dermatology: pain management: allergy:
antifungals: anti-infectives: anti-histamines and antiparasitic
drugs: and biotechnology-derived products.
ex)NIZORAL, SPORANOX, RISPERDAL(Janssen)
Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
3. <Income Statement>
Financial Statement
<Balance Sheet>
Financial Statement
<Cash Flow>
Financial Statement
Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
5. Series1
Total Current assets Total Long-Term assets 27320.000000
25997.000000
Series1
Total Current assets Total Long-Term assets 22995.000000
25268.000000
Vertical Analysis(Dollars in Millions
)2004Percent2003PercentSales to
customers47,348100.0%41,862100.0%Cost of products
sold13,42228.3%12,17629.1%Gross
profit33,92671.7%29,68670.9%Selling, marketing and
administrative expenses15,86033.5%14,13133.8%Research
expense5,20311.0%4,68411.2%Purchased in-process research
and development180.0%9182.2%Interest income(195)-
0.4%(177)-0.4%Interest expense, net of portion
capitalized1870.4%2070.5%Other (income) expenses,
net150.0%(385)-0.9%21,08844.5%19,37846.3%Earnings before
provision for taxes on
income12,83827.1%10,30824.6%Provision for taxes on
income4,3299.1%3,1117.4%Net earnings8,509 18.0%7,197
17.2%Basic net earnings per share2.87 2.42 Diluted net
earnings per share2.84 2.40
6. Horizontal Analysis(Dollars in Millions )20042003PercentSales
to customers47,34841,86213%Cost of products
sold13,42212,17610%Gross profit33,92629,68614%Selling,
marketing and administrative
expenses15,86014,13112%Research
expense5,2034,68411%Purchased in-process research and
development18918-98%Interest income(195)(177)-10%Interest
expense, net of portion capitalized187207-10%Other (income)
expenses, net15(385)104%21,08819,3789%Earnings before
provision for taxes on income12,83810,30825%Provision for
taxes on income4,3293,11139%Net earnings8,509 7,197
18%Basic net earnings per share2.87 2.42 19%Diluted net
earnings per share2.84 2.40 18%
8,509,000
13,422,000
21,088,000
4,329,000
5,813,400
4,959,800
10,004,300
2,161,100
11,332,000
7. 7,541,000
30,978,000
2,665,000
Bench Marking
Income from
Continuing Operations
Cost of Goods Sold
Operating and
Other Expenses
Income Taxes
(Dollars in Millions )
Income Taxes
JNJ MRK PFE 9.000000 9.000000 5.000000 Operating
and Other Expenses
JNJ MRK PFE 45.000000 44.000000 59.000000
Cost of Goods Sold
JNJ MRK PFE 28.000000 22.000000 14.000000
8. Income Taxes
JNJ MRK PFE 9.000000 9.000000 5.000000
Measuring Profitability
Rate of Return
on Net sales
Rate of Return
on Total asset
Rate of Return
on Common
Stockholders' Equity
Earnings per Share
of Common Stock$8,509$47,348
$(8,509+187)$(53,317+48,263)/2$(8,509-
0)$(31,813+26,869)/2$(8,509+0)2967973000$11,361$52,516$(1
1,361+359)$(123,684+116,775)/2$(11,361-
0)$(68,278+65,377)/2$(11,361-
11. Current Ratio
Inventory
Turnover
A.R
Turnover
Debt Ratio
$27,320$13,927$9,203 +
$6,831$13,927$13,422($3,744+$3,588)/2$8,509($6,831+$6,574
)/2$21,504$53,317$39,694$26,458$1,808+$18,085+$9,367$26,4
58$7,541($6,660+$5,699)/2$11,361($6,397+$8,636)/2$55,406$
123,648$13,475.2$11,744.1$2,878.8+$4,211.1+$3,627.2$11,744
.1$4,959.8($1,898.7+$2,554.7)/2$5,813.4($3,627.7+$4,023.6)/2
$25,284.6$42,572.8
(Dollars in Millions )
Liquidity
Quick Ratio
13. Introduction
Financial Statement
Evaluation of the Performance
Evaluation of the Liquidity
Non-Financial Information
Outline
Responsibility
Non-Financial Information
Head office
Global Affiliates
Segment Structures
The Operating Units
Decentralized
Organization Structure
Credo
Customers
15. Thank you for listening
Guideline for Final Group Project (BUSS 152)
1. Purpose
The final group project aims to provide students with a basic
understanding of the financial statements, in particular, the
annual report. Students should be able to analyze and evaluate
various aspects of the financial statements, with emphasis on
the topics discussed in the course.
2. Assessment and Submission
The final group project report carries 15% of the total marks of
the course. It will be graded on the contents and the level of
analyses. Each group is required to submit a final group project
report
Late submission will not be entertained.
3. Company Assignment
You need to work with an assigned group and choose a firm in
the attached list of Korean firms (see Appendix A). Your group
needs to analyze its latest available annual report. You can refer
to Appendix B to know how to get the financial statement data
of Korean firms.
4. Format
16. Each final group project report must include a cover page,
listing the following information: project title, instructor’s
name, group number and group members’ names. Your group
needs to submit a PowerPoint slide as the final group project
report. Photocopies of the various sections of the annual report
used in the analyses must be appended.
5. Contents
You are required to answer all questions below. You are
welcomed to use other sources of information (e.g., company’s
website, press release, newspaper clippings, etc.) but they must
be properly sourced and noted. Clearly label the questions you
are attempting.
6. Questions
a. What are the principal activities of your company?
b. Evaluate the performance of your company on the year under
review.
c. Evaluate the liquidity of your company at the end of year
under review.
d. Which non-financial information disclosed in the annual
report, such as in the management discussion, is most useful
and relevant for a further evaluation of your company? Explain.
7. Tips for Analyses
You can select some relevant analysis tools for your answers
from the following list of analysis tools. “Chapter14. Financial
Statement Analysis” on the textbook will be helpful for the
understanding of these analysis tools.
a. Draw up a common-sized income statement/balance sheet of
your company. Then conduct the horizontal/vertical analyses.
17. b. The skill of benchmarking will be helpful: Choose two or
three representative comparable firms of your company within
same industry. Then compare the common-sized income
statement/balance sheet of your company with them of chosen
comparable firms on the year under review.
c. Calculate and analyze relevant ratios, such as current ratio,
debt ratio, quick ratio, account receivable turnover, inventory
turnover, rate of return on sales, rate of return on equity, etc.
Appendix A: The List of Korean Companies
1
Daewoo Engineering & Construction
2
Daewoo Shipbuilding & Marine Engineering
3
Doosan Heavy Industries & Construction
4
GS Engineering & Construction Corp
5
SK Hynix Semiconductor Inc.
6
Hyundai Engineering & Construction
7
Hyundai Heavy Industries
8
Hyundai Mipo Dockyard
9
Hyundai Mobis
10
Hyundai Motor Co.
11
KCC Corporation
18. 12
Kia Motors Corporation
13
Korean Air Lines
14
KT Corporation
15
LG
16
LG Chemicals
17
LG Display
18
LG Electronics
19
Lotte Shopping
20
NHN Corporation
21
POSCO
22
Samsung C&T Corporation
23
Samsung Electronics
24
Samsung Heavy Industries
25
Samsung SDI
26
Shinsegae
27
SK Energy
28
SK Holdings
29
SK Telecom
19. 30
S-Oil Corporation
Appendix B: How to get the annual reports of Korean
companies
1. Please go to http://englishdart.fss.or.kr where the annual
reports of Korean companies are available. Then, click on
“XBRL Financial Statement” and “XBRL Search” on the top
menu to search your company’s annual report using a part (or
full) of the company name.
2. After choosing the reporting period and clicking on “Search,”
you will see the list of various reports. Choose annual report.
Click on “Download” on the top menu to get the excel
spreadsheet file including main financial statement data.
3. Repeat above procedure to get the financial statement data
for several years.
4. You can download the full annual reports from the homepage
of your firm (usually under the webpage of “Investor
Relations”)
PAGE 5