Question

1. Ralph Larsen, former chairman and CEO of Johnson & Johnson, was quoted in
this chapter concerning the use of the Internet. Johnson & Johnson has been one
of America’s premier companies for decades and has exhibited a high level of
social responsibility around the world. Go to the Johnson & Johnson website at
www.jnj.com.
2. Click on “Our Caring.” Scroll down and click on “Our Credo Values.” Now
scroll to the bottom of the page and download the Credo as a PDF under the
“Our Credo” link. Read the first two paragraphs and write a brief summary
of the credo. Return to the home page and click on “Investors.” Then scroll
down and click on the most recent Annual Report (“Annual Report and Proxy
Statements”).
3. Scroll down the Annual Report until you see “Consolidated Statement of
Earnings” for the last few years.
4. Compute the percentage change between the last two years for the following
(numbers are in millions of dollars): (PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
a. Sales to customers.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
b. Net earnings.(PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
c. Earnings per share. (PLEASE SHOW ALL WORK AS TO HOW YOU ARRIVED AT THE ANSWER)
5. Generally speaking, is Johnson & Johnson growing by more or less than
10 percent per year?

Answer 1

Summary of the company’s credo - Johnson & Johnson’s (J&J) credo is based on the belief that the organization is responsible and accountable to stakeholders who are directly impacted by its products. Such stakeholders are doctors, nurses, patients, all parents who use the company’s products for their young ones. The company has to meet the needs and requirements of its stakeholders in an efficient and optimal manner and also has to ensure that its offerings are of the highest quality. In this effort the company also has to ensure that its vendors, suppliers as well as distributors are able to make profit on a sustainable basis. Likewise the company is aware of its responsibility towards its employees and seeks to provide fair compensation, equitable opportunities and a chance to grow, progress, advance and develop within the company.

Annual report analysis:

	Year
	2016	2015	% change
Sales to customers	71,890.00	70,074.00	2.59
Net earnings	16,540.00	15,409.00	7.34
Earnings per share (basic)	6.04	5.56	8.63

Calculation: Formula for % change = (2016 amount-2015 amount)/2015 amount*100

% change of sales = (71890-70074)/70074 * 100 = 2.59%

% change in net earnings = (16540-15409)/15409 * 100 = 7.34%

% change in EPS = (6.04-5.56)/5.56 * 100 = 8.63%

As we can see from the above numbers the year-on-year (y-o-y) growth in the company’s sales to customers was 2.59% in 2016 and the growth in net earnings was 7.34% during the same period. Thus the company’s topline (revenue) as well as bottomline (profits) grew at less than 10% on a y-o-y basis.