Assignment #2-Company Project Guideline In order to evaluate your understanding
ID: 365071 • Letter: A
Question
Assignment #2-Company Project Guideline In order to evaluate your understanding of the use of financial statement in decision making, you are asked to assume the role of a financial analyst. In this role, you will review the profitability, stability, solvency, and potential for growth of a publicly held company listed on the NYSE or NASDAQ. Your analysis and research can be viewed as a form of storytelling. What you will may want to research: Industry information A company profile Any update news that impact's your company, industry, etc Historical stock price information Annual reports of 10-K filings for the last three years Rivalry among existing firms Threat of new entrants Threat of substitute products Bargaining power of customers Bargaining power of suppliers Overall evaluation of industry You are to provide a short report on the company. In the report, you will provide some background information on the company of your choice. You will also focus in on why you would like to invest in the company and identifylexplain your reasons why.Explanation / Answer
Johnson & Johnson
A name which is quite popular not only in US but in the whole worl, each and every houisehold has used the facilities and products manufactured by this company. If we travel some some 130 years back in 1885 the company started its journey and the very first product that it manufactured was Surgical Dressing and from then the company has walked a long way and today not only surgical dressing, it has products in 3 different sections namely Pharmaceuticals, Consumer healthcare products and even medical devices and this has made the company a brand and also a member in the Fortune 500 list.
Like each every business organization, the basic objective of Johnson & Johnson is generate as mush revenue as possible and derive profit from the same and the company has been quite successful if we refer the statistical growth of the company from the very beginning till date. In the year 2015 it had a record sales amount of $70.1 billion dollars which included the contribution of the 250+ subsidiary companies present in 60 countries and the products manufactured are solod in over 175 countries which validates the global presence and popularity of the brand. Again, to run a business a company has to look after the clients as well as the employees and Johnson & Johnson provides employment to around 130000 employees all over the world.
if anybody asks me that why is Johnson & Johnson doing so well financially inspite of various other competitors in the market: the answer is very simple the company was never stagnant and did not rely on a particular product for long instead it always adopted a dynamic approach and altered the business plan according to the market demand which has made the company what it is today. The company always had a new approach and that is the reason why products like Band-Aid, Contact Lense, Baby Products and even facial wash is a household name.
The company possess a very strong position in the New York Stock Exchange and has provided dividends to large extent. While investing in a company, there are some parameters that I examine and the decesion is taken based on the outcome from the parameters, generally they are brand value of the company, historical record of the stock price, reasonable valuation of stocks,etc.
Analysis of the parameters mentioned will make it clear that investment in the company will yield profitable results or not. Brand value is something which the company possess a lot and this is the primary reason of inveting in Johnson & Johnson because even if the stock price goes down for some time it can be hoped that the company will fight back the situation and recover as it has always done and if we look back to 2010 when there were around 10000 lawsuits which Johnson & Johnson faced which lowered down the price of the company but the situation was handled and the company recovered. As mentioned above Johnson & Johnson is not only a name in US but it has a global presence and the business strategy is different in different countries which has made it successful everywhere therefore the performance of the company abroad will also matter.
If we look at the historical record of the stock prices of Johnson & Johnson we will notice variations which is obvious but quarterly results have been convincing all the time starting from 2010 except a few instances. In 2012 the stock price was $70.1 and in 2016 it was $115.21 and except in 2015 the price has gone up on a constant rate which is enough to convinve investors that the organization is doing well consistently.
There are other factors which has made Johnson & Johnson unique, it should be noted that the organization experiences a lot of competition from other organizations who are also a big name in the industry but the competition has always been limited to a group of products because the other companies may manufacture a section of product which Johnson & Johnson manufactures bt as it possess diversity in products, the competitor is unable to pose a threat. For Example in the medical device section the competitors are Meditronic and BSX, again in the orthopaedic section it competes with Zimmer but there is very less competition when it comes to prviding such a huge range of products from just one organization.
After analysing the parameters it can be concluded that Johnson & Johnson is a good and safe option to invest because statistics, current performance, brand value and dynamic approach supports the well being of the organization.