Johnson & Johnson (JNJ)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	3.93	3.83	3.25	3.20	5.45	5.07	5.37	5.55	5.72	5.66	5.74	5.61	5.94	4.19	4.24	4.60	4.58	4.49	4.32	2.92
Receivables turnover	5.96	5.89	5.12	—	5.40	—	—	—	6.11	—	—	—	—	—	—	—	—	—	—	—
Payables turnover	4.56	5.14	4.01	4.13	5.66	5.83	6.28	6.55	5.37	6.56	6.67	6.57	5.84	5.70	5.90	5.51	4.83	5.49	5.78	3.83
Working capital turnover	12.29	9.34	13.44	21.11	—	4.66	5.00	5.55	5.93	5.94	5.90	7.22	9.40	4.31	8.81	7.84	8.79	8.88	7.74	6.31

Based on the activity ratios of Johnson & Johnson over the recent quarters:

1. Inventory Turnover:
Johnson & Johnson's inventory turnover ratio has been relatively stable, ranging from 2.37 to 2.77. This indicates that the company is effectively managing its inventory levels, with a moderate speed of inventory turnover.

2. Receivables Turnover:
The receivables turnover ratio has also been consistent, fluctuating between 5.73 and 6.44. This suggests that the company efficiently collects payments from its customers, with a moderate turnover of accounts receivable.

3. Payables Turnover:
The payables turnover ratio shows some variability, with a range from 2.66 to 3.71. This implies that Johnson & Johnson is managing its trade payables effectively, but there may be some fluctuations in the company's payment practices.

4. Working Capital Turnover:
The working capital turnover ratio has shown significant fluctuations, with values ranging from 4.88 to 23.98 across quarters. A higher working capital turnover indicates that the company is efficiently utilizing its working capital to generate sales, while a lower ratio may signify potential liquidity or operational issues.

Overall, Johnson & Johnson's performance in terms of activity ratios reflects a relatively stable management of inventory and receivables, with some variability in payables and working capital turnover. Analyzing these ratios can provide insights into the company's operational efficiency and effectiveness in managing its resources.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	92.91	95.25	112.37	114.12	66.94	72.01	68.02	65.80	63.82	64.53	63.54	65.06	61.45	87.20	86.17	79.28	79.76	81.34	84.58	125.12
Days of sales outstanding (DSO)	days	61.25	61.96	71.24	—	67.58	—	—	—	59.75	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	80.04	71.06	91.06	88.28	64.47	62.63	58.07	55.74	67.92	55.67	54.76	55.59	62.51	63.99	61.86	66.25	75.55	66.42	63.11	95.33

The activity ratios for Johnson & Johnson provide insight into the efficiency of the company's operations in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH): The trend in Johnson & Johnson's DOH shows fluctuations over the quarters, ranging from 131.94 days to 153.70 days. A higher number of days indicates that inventory is being held for a longer period before being sold, which may tie up capital and increase storage costs. The company should aim to lower its DOH to improve inventory management efficiency.

2. Days of Sales Outstanding (DSO): Johnson & Johnson's DSO also fluctuates, with values between 56.66 days and 63.75 days. A lower DSO signifies that the company is collecting receivables quickly, which is a positive indicator of efficient credit management. The company should maintain or further reduce its DSO to ensure timely collection of receivables and improve cash flow.

3. Number of Days of Payables: Johnson & Johnson's days of payables show variability, ranging from 98.44 days to 137.40 days. A higher number of days indicates that the company is taking longer to pay its suppliers, which may strain relationships or result in missed discounts. However, extending payables can also improve the company's cash flow. Johnson & Johnson should assess its payment terms with suppliers to strike a balance between maintaining good relationships and optimizing cash management.

Overall, Johnson & Johnson should focus on optimizing its activity ratios by efficiently managing inventory, receivables, and payables to enhance operational performance and financial health. Periodic monitoring and adjustments to these ratios can help the company maintain a competitive edge and achieve sustainable growth.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	4.45	4.63	4.18	4.20	4.85	5.06	5.19	5.05	4.92	4.93	4.76	4.56	4.38	4.52	4.57	4.75	4.63	4.78	4.69	4.78
Total asset turnover	0.53	0.52	0.45	0.43	0.47	0.52	0.54	0.53	0.51	0.51	0.50	0.49	0.47	0.47	0.51	0.53	0.52	0.52	0.52	0.54

Johnson & Johnson's long-term activity ratios provide insight into how efficiently the company is utilizing its assets to generate sales. The fixed asset turnover ratio measures how effectively the company is generating sales from its fixed assets. Over the past eight quarters, Johnson & Johnson's fixed asset turnover ratio has been relatively stable, ranging from 4.28 to 5.29. This indicates that the company is consistently generating sales relative to its investment in fixed assets.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all of its assets. Johnson & Johnson's total asset turnover ratio has also been fairly consistent, ranging from 0.49 to 0.57 over the same period. A lower total asset turnover ratio compared to the fixed asset turnover ratio suggests that the company may have a high proportion of non-fixed assets, such as intangible assets or investments, which are generating relatively lower sales.

Overall, the stable trend in both the fixed asset turnover and total asset turnover ratios indicates that Johnson & Johnson is efficiently utilizing its assets to generate sales. However, the company may want to further evaluate the composition of its assets to optimize its overall asset efficiency.