Johnson & Johnson

The after chart illustrates that the modern day ratio has remained fairly stable at between 1.58 and 1.83 during the period in question, indicating that the company is maintaining a strategy of relative liquidity. The decline from 1991 to 1992 could indicate how the company is taking on an excessive amount of short-term debt; this measures must be carefully monitored in 1993. Of feasible higher concern will be the simple fact that Johnson & Johnson's current ratio is well below that on the marketplace like a whole. This implies that firms operating inside same environment as Johnson & Johnson have a more competitive liquid position and may be much better able to take advantage of marketplace opportunities.

Leverage ratios measure the level to which financing is obtained from creditors as opposed to provided by owners. Right here chart illustrates 3 key leverage ratios for Johnson and Johnson from 1990 through 1992. The debt to equity ratio measures total debts divided by equity, and is really a measure of regardless of whether the company obtains the bulk of its dollars from creditors or from owners. The remaining 2 ratios, modern day liability to equity and long-term debt to equity, break the first ratio down into its part short-term and long-term parts. Johnson & Johnson has a strong reliance on each short-term and long-term debt; each have elevated more than 1990 - 1992. The business was in a position to reduce its debt as The world wide web profit margin is particularly telling for Johnson & Johnson, however.

Even though gross margin remained relatively steady, world-wide-web margin elevated from 7.5 percent in 1990 to 10.2 percent in 1992, as well as the 1992 figure was down over 1.5 things from 1991. This means how the business was in a position to realize efficiency gains elsewhere from the organization that enabled it to squeeze far more growth from its performance.

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