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Analysis of Goodwill and Intangible Assets
Advanced level
Goodwill and Intangible Asset Disclosure
Johnson & Johnson, balance sheet: goodwill and intangible assets
US$ in millions
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
| Item | Description | The company |
|---|---|---|
| Intangible assets, net | Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. | Johnson & Johnson’s intangible assets, net decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
| Goodwill | Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. | Johnson & Johnson’s goodwill decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
| Intangible assets and goodwill | Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. | Johnson & Johnson’s intangible assets and goodwill decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Adjustments to Financial Statements: Removal of Goodwill
Johnson & Johnson, adjustments to financial statements
US$ in millions
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
Johnson & Johnson, Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Johnson & Johnson, adjusted financial ratios
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
| Financial ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Johnson & Johnson’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
| Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Johnson & Johnson’s adjusted financial leverage ratio decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
| Adjusted ROE | A profitability ratio calculated as net income divided by adjusted shareholders’ equity. | Johnson & Johnson’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Johnson & Johnson’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Johnson & Johnson, Financial Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
2019 Calculations
1 Total asset turnover = Sales to customers ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Sales to customers ÷ Adjusted total assets
= ÷ =
| Activity ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Johnson & Johnson’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Adjusted Financial Leverage
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
2019 Calculations
1 Financial leverage = Total assets ÷ Shareholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= ÷ =
| Solvency ratio | Description | The company |
|---|---|---|
| Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Johnson & Johnson’s adjusted financial leverage ratio decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
2019 Calculations
1 ROE = 100 × Net earnings ÷ Shareholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Net earnings ÷ Adjusted shareholders’ equity
= 100 × ÷ =
| Profitability ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as net income divided by adjusted shareholders’ equity. | Johnson & Johnson’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-24).
2019 Calculations
1 ROA = 100 × Net earnings ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net earnings ÷ Adjusted total assets
= 100 × ÷ =
| Profitability ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Johnson & Johnson’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |