Johnson & Johnson (JNJ)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.15 | 0.14 | 0.16 | 0.19 | 0.17 |
| Debt-to-capital ratio | 0.27 | 0.26 | 0.29 | 0.34 | 0.31 |
| Debt-to-equity ratio | 0.38 | 0.35 | 0.41 | 0.52 | 0.45 |
| Financial leverage ratio | 2.44 | 2.44 | 2.46 | 2.76 | 2.65 |
The solvency ratios for Johnson & Johnson indicate the company's ability to meet its long-term financial obligations:
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. Johnson & Johnson's debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.18 to 0.21. A lower ratio implies lower financial risk, as a larger portion of the assets are funded by equity.
2. Debt-to-capital ratio: This ratio shows the percentage of the company's capital structure that is financed by debt. Johnson & Johnson's debt-to-capital ratio has decreased from 0.36 in 2021 to 0.30 in 2023, indicating a lower reliance on debt financing compared to equity. A lower ratio suggests a more conservative capital structure.
3. Debt-to-equity ratio: This ratio compares the portion of the company's assets financed by debt to equity. Johnson & Johnson's debt-to-equity ratio has shown a declining trend from 0.56 in 2021 to 0.43 in 2023. A decreasing ratio indicates decreasing financial risk, as equity financing plays a larger role in the capital structure.
4. Financial leverage ratio: This ratio measures the company's total debt relative to its equity. Johnson & Johnson's financial leverage ratio has fluctuated over the years, peaking at 2.76 in 2021 and declining to 2.44 in 2023. A lower ratio indicates a lower degree of financial risk and a stronger equity position to cover debt obligations.
Overall, Johnson & Johnson's solvency ratios suggest a conservative approach to capital structure and decreasing reliance on debt financing over the years. The company's strong financial position is supported by its decreasing debt ratios and improving leverage ratios, indicating a healthy balance between debt and equity in its long-term financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 48.78 | 79.71 | 125.46 | 83.07 | 55.49 |
Based on the data provided, we can see that Johnson & Johnson's interest coverage ratio for the years ending January 2, 2022 and January 3, 2021 was 188.82 and 221.27, respectively. This indicates that the company generated operating income significantly higher than its interest expenses during these years, demonstrating strong financial health and the ability to comfortably cover its interest obligations. However, the interest coverage ratio for the years ending December 31, 2023 and December 29, 2019 is not available in the provided table. It would be essential to assess the trend in interest coverage over time to gain a more comprehensive understanding of Johnson & Johnson's ability to meet its interest payments.