Johnson & Johnson (JNJ)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.17 | 0.15 | 0.14 | 0.16 | 0.19 |
| Debt-to-capital ratio | 0.30 | 0.27 | 0.26 | 0.29 | 0.34 |
| Debt-to-equity ratio | 0.43 | 0.38 | 0.35 | 0.41 | 0.52 |
| Financial leverage ratio | 2.52 | 2.44 | 2.44 | 2.46 | 2.76 |
Based on the provided data, Johnson & Johnson's solvency ratios demonstrate a strong financial position and effective management of debt. The Debt-to-assets ratio has shown a decreasing trend from 0.19 in 2020 to 0.17 in 2024, indicating that a lower percentage of the company's assets are financed by debt over the years.
Similarly, the Debt-to-capital ratio has also decreased from 0.34 in 2020 to 0.30 in 2024, suggesting a decline in the proportion of debt in the company's capital structure.
The Debt-to-equity ratio has followed a similar path, declining from 0.52 in 2020 to 0.43 in 2024, which indicates that the company has been relying less on debt and more on equity to finance its operations.
The Financial leverage ratio has remained relatively stable around 2.44 to 2.76 during the period under review, indicating that Johnson & Johnson has been effectively managing its debt levels in relation to its equity.
Overall, the downward trend in these solvency ratios suggests that Johnson & Johnson is maintaining a strong solvency position and is effectively managing its debt levels to support its long-term financial stability.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 212.23 | 48.78 | 79.71 | 125.46 | 83.07 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Johnson & Johnson's interest coverage has fluctuated over the past five years. In December 2020, the interest coverage was 83.07, indicating the company generated sufficient earnings before interest and taxes to cover its interest expense. The ratio improved in December 2021 to 125.46, suggesting a stronger ability to meet interest obligations.
However, there was a decline in interest coverage in December 2022 to 79.71, which could indicate the company's earnings were less able to cover interest expenses. Further, in December 2023, the interest coverage ratio dropped to 48.78, which may raise concerns about Johnson & Johnson's ability to easily meet its interest payments.
The significant improvement in interest coverage in December 2024 to 212.23 is notable and suggests that the company experienced a substantial increase in earnings relative to its interest expenses, indicating a strong financial position at the end of the period. It is essential for investors and stakeholders to monitor Johnson & Johnson's interest coverage ratio over time to assess the company's financial health and debt management capabilities.