Johnson & Johnson (NYSE:JNJ)

The financial data reveals distinct trends in the annual current and deferred income tax expenses over the five-year period.

Currently payable (US$ in millions)

There is a consistent increase in the currently payable tax from 2020 through 2023, starting at 2,924 million USD in 2020 and peaking at 5,795 million USD in 2023. However, in 2024, there is a noticeable decline to 4,804 million USD, indicating a reduction in the current tax liability compared to the previous year.

Deferred (US$ in millions)

The deferred tax shows a negative value throughout the period, which indicates deferred tax assets or tax benefits recognized. From 2020 to 2021, the deferred tax amount becomes more negative, increasing from -1,141 million USD to -2,079 million USD, suggesting growing deferred tax assets. In 2022, the value moves slightly towards zero to -1,663 million USD but then experiences a large negative spike in 2023, reaching -4,059 million USD. This is followed by a partial reversal or reduction to -2,183 million USD in 2024. The fluctuations suggest volatility in deferred tax components possibly due to changing timing differences or tax rates.

Provision for taxes on income (US$ in millions)

The provision for income taxes demonstrates an overall volatile pattern. It increases modestly from 1,783 million USD in 2020 to 1,898 million USD in 2021, then more than doubles to 3,784 million USD in 2022. In 2023, it decreases sharply to 1,736 million USD, the lowest in the five-year span, before rising again to 2,621 million USD in 2024. This variability suggests fluctuations in taxable income, tax planning strategies, or changes in tax regulations impacting the effective tax expense.

Collectively, these data points indicate variations in tax expense management, with a trend of rising current tax liabilities until 2023 followed by a decrease, alongside fluctuating deferred tax balances. The provision for taxes on income aligns with these movements, highlighting changes in the overall tax burden borne by the company over time.

The analysis of the tax-related financial data over the five-year period reveals several notable trends and fluctuations impacting the effective tax rate.

U.S. statutory tax rate

The U.S. statutory tax rate remained steady at 21% throughout the entire period, indicating no changes in the statutory framework affecting the corporation’s tax obligations domestically.

International operations

The impact of international operations on the tax rate showed significant variability. Starting at -9.9% in 2020, the effect deepened to -16.4% in 2021, then sharply reduced to -4.5% in 2022. It increased again negatively to -8.1% in 2023 and slightly lessened to -5.2% in 2024, reflecting ongoing fluctuations in international tax dynamics, possibly due to changing geographic mix of earnings or tax regulations abroad.

U.S. tax settlements

This component was negligible or absent in the initial years but showed a notable negative impact of -3% in 2022, followed by a positive impact of 1% in 2023, indicating adjustments or resolutions of tax disputes affecting reported rates.

Consumer health separation

This item appeared only in 2022 with a positive 2.2%, suggesting a one-time tax effect related to restructuring or divestiture activities within consumer health segments during that year.

U.S. taxes on international income

This factor exhibited irregular movement: starting with positive impacts of 2.7% (2020) and 6.7% (2021), it turned negative from 2022 onward, reaching -1.9%, -0.3%, and -2.6% in subsequent years. This trend indicates shifting tax treatments or repatriation strategies impacting international earnings.

U.S. state taxes

This item was introduced in 2022 and increased progressively from 0.3% to 1.5% by 2024, reflecting a rising burden from state-level taxation.

Tax benefits from loss on capital assets

Reported only in the first two years at modest negative values (-1.2%, -1.3%), with no recognized impact thereafter, which may suggest the absence of loss-related tax benefits in later years.

Tax benefits on share-based compensation

Consistently presented as a negative contribution reducing the tax rate, this benefit diminished in magnitude over time, from -1.5% in 2020 to -0.6% in 2024, suggesting either changes in share-based compensation expenses or their associated tax treatment.

All other

This category fluctuated between minor negative and positive contributions, starting at -0.3% in 2020, reaching +1.7% in 2023, before declining to 0.6% in 2024, representing miscellaneous impacts on tax expense.

Effective tax rate

The effective tax rate showed considerable variation. It decreased from 10.8% in 2020 to a low of 8.3% in 2021, then sharply rose to 17.4% in 2022. This was followed by a decline to 11.5% in 2023 and a subsequent increase to 15.7% in 2024. The fluctuations suggest significant influences from the factors discussed above, notably international operations, U.S. tax settlements, and changes in tax benefits, reflecting complex and evolving tax circumstances.

The financial data reflects several notable trends over the analyzed periods.

Employee related obligations

There is a consistent decline from US$2,434 million in 2020 to US$372 million in 2024, indicating a significant reduction in these liabilities over time.

Stock based compensation

This category shows a gradual increase, rising from US$627 million in 2020 to US$717 million in 2024, suggesting a slight growth in compensation expenses linked to stock.

R&D capitalized for tax

There is a steady and substantial increase in capitalized R&D costs for tax purposes, from US$1,517 million in 2020 to US$4,398 million in 2024, reflecting intensified investment in research and development activities.

Reserves & liabilities

After a decrease from US$3,466 million in 2020 to US$2,761 million in 2022, reserves and liabilities rose sharply to US$4,444 million in 2024, indicating fluctuating but ultimately increasing obligations.

Inventory related

Inventory-related obligations exhibit volatility, peaking at US$2,566 million in 2021, then sharply declining to around US$370 million by 2024, possibly reflecting changes in inventory management or valuation.

Operating loss carryforwards

This item shows continual growth, increasing from US$990 million in 2020 to US$2,298 million in 2024, indicating accumulated tax loss benefits that may be used to offset future taxable income.

Undistributed foreign earnings

Reported positive undistributed foreign earnings increase consistently from US$812 million in 2020 to US$1,931 million in 2024. Conversely, related negative balances decrease in absolute value from -US$1,435 million in 2020 to -US$1,492 million in 2024, suggesting changes in foreign earnings distribution or valuation.

Miscellaneous international and U.S.

Miscellaneous international items increase slightly with some fluctuations, while miscellaneous U.S. items rise notably from US$12 million in 2020 to US$1,083 million in 2024, suggesting varied and increasing miscellaneous tax or liability items in the U.S.

Deferred tax assets

Deferred tax assets remain relatively stable between US$13,138 million and US$16,826 million over the five-year span, with an upward trajectory after 2022.

Valuation allowances

Introduced in 2023 and increasing in magnitude to -US$1,638 million in 2024, valuation allowances reduce net deferred tax assets, indicating increased recognition of potential impairments.

Deferred tax assets net of valuation allowances

After peaking at US$13,819 million in 2023, the net deferred tax assets decrease to US$15,188 million in 2024 following the increase in valuation allowances, highlighting a reduction in recoverable deferred tax benefits.

Depreciation of property, plant and equipment

Depreciation expenses are relatively consistent, around -US$833 million to -US$902 million annually, indicating steady asset depreciation.

Goodwill and intangibles

There is substantial volatility in goodwill and intangible assets across the years, showing no consistent trend but large fluctuations between periods, which may reflect acquisitions, impairments, or disposals.

Non-deductible intangibles

Only reported in 2020 as -US$6,567 million, with no further data, suggesting discontinuation or reclassification of this item in subsequent years.

Global intangible low-taxed income

This liability decreases steadily from -US$3,606 million in 2020 to -US$1,589 million in 2024, indicating a reduction in global low-taxed intangible income exposures or related tax liabilities.

Deferred tax liabilities

Deferred tax liabilities show a declining trend from -US$11,819 million in 2020 to -US$7,175 million in 2024, suggesting a reduction in these obligations over time.

Deferred income taxes

There is a strong upward trend, increasing from US$1,319 million in 2020 to US$8,013 million in 2024, indicating higher recognition of deferred income tax benefits or liabilities.

The data reveals notable developments in the deferred tax positions over the five-year period ending in 2024. Deferred tax assets have exhibited a generally upward trend, increasing from 8,534 million US dollars in 2020 to 10,461 million US dollars in 2024. This growth, though subject to fluctuations, indicates a strengthening in the company's deferred tax asset base.

Conversely, deferred tax liabilities have shown a consistent and significant downward trajectory during the same period. Starting at 7,214 million US dollars in 2020, the liabilities reduce steadily each year, reaching 2,448 million US dollars in 2024. The reduction in deferred tax liabilities notably accelerates after 2022, with a marked decrease from 6,374 million US dollars in 2022 to 3,193 million in 2023, and further down to 2,448 million by the end of 2024.

The contrasting trends between the deferred tax assets and deferred tax liabilities result in an improving net deferred tax position. The increase in assets combined with the sharp decline in liabilities may suggest a strategic maneuver to optimize tax outcomes, possibly through timing differences in income recognition, deductible temporary differences, or reassessment of tax positions.

Overall, the evolving deferred tax profile points toward enhanced tax management efficiency and potentially indicates improved future tax benefits, contributing positively to the company's financial flexibility.

Total Assets

Reported total assets show a general upward trend from 174,894 million US dollars in 2020 to 180,104 million US dollars in 2024, with a noticeable dip in 2023 to 167,558 million US dollars. Adjusted total assets follow a similar pattern, increasing from 166,360 million US dollars in 2020 to 169,643 million US dollars in 2024, also experiencing a decline in 2023 to 158,279 million US dollars. This suggests a temporary contraction in asset base during 2023, followed by a recovery.

Total Liabilities

Reported total liabilities decreased overall from 111,616 million US dollars in 2020 to 108,614 million US dollars in 2024, reaching a low of 98,784 million US dollars in 2023. Adjusted total liabilities exhibit a consistent decline from 104,402 million US dollars in 2020 to 106,166 million US dollars in 2024, with the lowest point also in 2023 at 95,591 million US dollars. Both measures indicate a reduction in financial obligations over the period, with liabilities falling significantly in 2023 before a slight increase in 2024.

Shareholders’ Equity

Reported shareholders’ equity increased from 63,278 million US dollars in 2020 to 71,490 million US dollars in 2024, peaking at 76,804 million US dollars in 2022. A decline is observed in 2023 to 68,774 million US dollars, partially recovering the following year. Adjusted shareholders’ equity trends align closely, rising from 61,959 million US dollars in 2020 to 63,477 million US dollars in 2024, with a peak in 2022 followed by a decrease in 2023. The reduction in equity during 2023 corresponds with asset and liability fluctuations in the same year.

Net Earnings

Reported net earnings demonstrate volatility, increasing substantially from 14,714 million US dollars in 2020 to a peak of 35,153 million US dollars in 2023, then sharply declining to 14,066 million US dollars in 2024. Adjusted net earnings follow a similar trend, rising from 13,573 million US dollars in 2020 to 31,094 million US dollars in 2023 before dropping to 11,883 million US dollars in 2024. This pattern indicates an exceptional earnings performance in 2023, followed by a significant reduction in 2024.

Overall Insights

The data reflects a generally stable asset base with moderate growth over the five-year period, except for 2023 when assets contracted notably. Liability levels decreased, particularly in 2023, improving the company’s leverage position temporarily. Shareholders’ equity increased overall but showed sensitivity to fluctuations in assets and liabilities, particularly with declines in 2023. The net earnings figures reveal considerable variability, highlighting an exceptionally strong performance in 2023 that was not sustained in 2024, suggesting a potentially one-off factor influencing earnings in that year or challenging market conditions subsequently.

Net Profit Margin

Reported net profit margin exhibited fluctuations, rising significantly from 17.82% in 2020 to a peak of 41.28% in 2023 before declining sharply to 15.84% in 2024. The adjusted net profit margin followed a similar pattern, increasing from 16.44% in 2020 to 36.51% in 2023 and then decreasing to 13.38% in 2024. This pattern suggests variability in profitability with a notable peak in 2023.

Total Asset Turnover

The reported total asset turnover showed slight improvement from 0.47 in 2020 to 0.52 in 2021, maintaining fairly stable levels around 0.51 thereafter with a minor decrease to 0.49 in 2024. Adjusted total asset turnover displayed a slight upward trend from 0.5 in 2020 to 0.54 in 2023, before dipping to 0.52 in 2024. Overall, asset utilization remained relatively steady with modest gains over the period.

Financial Leverage

Reported financial leverage decreased from 2.76 in 2020 to 2.44 in 2022 and 2023, followed by a slight increase to 2.52 in 2024. Adjusted financial leverage similarly declined from 2.69 in 2020 to 2.41 in 2021 and 2022, then rose to 2.52 in 2023 and further to 2.67 in 2024. These trends indicate a reduction in leverage in the early years, with a gradual reversal beginning in 2023.

Return on Equity (ROE)

Reported ROE increased from 23.25% in 2020 to a peak of 51.11% in 2023, then decreased substantially to 19.68% in 2024. Adjusted ROE followed a comparable trajectory, rising from 21.91% in 2020 to 49.6% in 2023 before dropping to 18.72% in 2024. This pattern parallels the net profit margin trend and signals high volatility in capital efficiency during the period, marked by exceptional performance in 2023.

Return on Assets (ROA)

Reported ROA experienced growth from 8.41% in 2020 to 20.98% in 2023, followed by a decline to 7.81% in 2024. Adjusted ROA showed a similar trend, rising from 8.16% in 2020 to 19.65% in 2023 and then falling to 7% in 2024. This indicates that asset profitability improved considerably until 2023 but weakened significantly thereafter.

Summary of Trends

Overall, the financial metrics reveal a pattern of improvement in profitability, asset utilization, and returns up to 2023, followed by a pronounced contraction in 2024. The year 2023 stands out with notably higher margins, returns, and moderate leverage. While total asset turnover remained stable with slight improvements, both reported and adjusted financial leverage decreased initially before marginally rising again in the last two years. The pronounced fluctuations in profit margins and returns suggest periods of exceptional performance interspersed with challenges impacting profitability and efficiency in 2024.

Reported Net Earnings

The reported net earnings showed an overall increase from 2020 to 2023, rising from 14,714 million US dollars in 2020 to a peak of 35,153 million US dollars in 2023. However, there was a significant decline in 2024, with earnings dropping to 14,066 million US dollars, nearly returning to the 2020 level. This suggests a strong growth period followed by a sharp contraction in the most recent year.

Adjusted Net Earnings

Adjusted net earnings follow a similar pattern to reported net earnings, increasing steadily from 13,573 million US dollars in 2020 to a high of 31,094 million US dollars in 2023. This was followed by a steep decrease to 11,883 million US dollars in 2024. The adjusted figures are consistently lower than the reported figures but show the same general trend, indicating that adjustments for reported and deferred income taxes had a proportional impact across the years.

Reported Net Profit Margin

The reported net profit margin showed improvement from 17.82% in 2020 to 22.26% in 2021, then experienced a decline in 2022 to 18.9%. A substantial increase occurred in 2023, reaching 41.28%, which represents an exceptional margin performance. However, the margin sharply decreased to 15.84% in 2024, falling below the initial 2020 margin level, signaling considerable volatility in profitability ratios across the periods.

Adjusted Net Profit Margin

The adjusted net profit margin exhibited a similar trend to the reported margin, starting at 16.44% in 2020 and rising to 20.05% in 2021. In 2022, it decreased to 17.15%, before rising significantly to 36.51% in 2023. This was followed by a sharp decline to 13.38% in 2024, the lowest margin observed during the period. This pattern highlights consistent fluctuations in profitability, with notable gains in 2023 offset by substantial declines in 2024 after adjustment factors are accounted for.

Overall Observations

The data indicates a period of growth and strong profitability culminating in 2023, with both earnings and profit margins reaching their highest levels. However, the subsequent decline in 2024 across all metrics suggests challenges impacting the company’s financial performance. The parallel movements in reported and adjusted figures imply that tax adjustments consistently influenced earnings and margins but did not alter the general trend of volatility observed over the five-year period.

Reported Total Assets

The reported total assets increased consistently from 174,894 million US dollars in 2020 to 187,378 million US dollars in 2022. A notable decline occurred in 2023, with assets decreasing to 167,558 million US dollars, followed by a recovery to 180,104 million US dollars in 2024. This indicates a fluctuation in asset levels, with a dip in 2023 before a partial rebound.

Adjusted Total Assets

Adjusted total assets exhibit a similar trend to the reported figures, rising steadily from 166,360 million US dollars in 2020 to 178,255 million US dollars in 2022. A decline is also observed in 2023, falling to 158,279 million US dollars, before increasing again to 169,643 million US dollars in 2024. The adjusted figures are consistently lower than reported assets, reflecting the impact of deferred income tax adjustments.

Reported Total Asset Turnover

The reported total asset turnover ratio improved from 0.47 in 2020 to 0.52 in 2021, indicating increased efficiency in using assets to generate sales. It remained relatively stable through 2022 and 2023, at approximately 0.51, before slightly decreasing to 0.49 in 2024. This suggests a minor reduction in asset utilization efficiency in the most recent period.

Adjusted Total Asset Turnover

The adjusted total asset turnover shows a similar pattern but at higher levels compared to the reported ratio. Starting at 0.50 in 2020, it increased to 0.55 in 2021, then slightly declined to 0.53 in 2022, and rebounded to 0.54 in 2023 before a slight dip to 0.52 in 2024. This indicates that after accounting for deferred income tax adjustments, the asset utilization efficiency is generally stronger, with minor fluctuations over the assessed periods.

The analyzed data reveals notable trends in the financial position over the five-year period.

Total Assets

Reported total assets show an overall increasing trend from 174,894 million in 2020 to 180,104 million in 2024, with a peak in 2022 at 187,378 million before declining in 2023 and partially recovering in 2024. Adjusted total assets follow a similar pattern but consistently present lower values than reported assets, reflecting the adjustment effects, with growth from 166,360 million in 2020 to 169,643 million in 2024 after a dip in 2023.

Shareholders’ Equity

Reported shareholders’ equity increases steadily from 63,278 million in 2020 to 76,804 million in 2022, then falls in 2023 to 68,774 million and slightly rises in 2024 to 71,490 million. Adjusted shareholders’ equity mimics this trajectory but remains consistently lower than the reported figures, starting at 61,959 million in 2020 and ending at 63,477 million in 2024, evidencing the impact of tax adjustments or other reconciliations.

Financial Leverage

Reported financial leverage decreases notably from 2.76 in 2020 to 2.44 in 2022 and remains stable at that level through 2023 before rising slightly to 2.52 in 2024. Adjusted financial leverage decreases from 2.69 to 2.41 between 2020 and 2022 but then increases to 2.67 by 2024, surpassing the 2020 level. This suggests an increase in relative debt or liabilities compared to equity on an adjusted basis in the latest years.

Overall, the data indicates growth in total assets and shareholders’ equity until 2022, followed by a contraction in 2023 with partial recovery in 2024. Adjusted figures consistently trail reported values, pointing to the effects of deferred income tax and other adjustments. Financial leverage trends reveal a reduction in leverage until 2022, with a subsequent rise on an adjusted basis, implying cautious financial management with some recent increase in gearing ratio.

Net Earnings

Reported net earnings exhibited substantial volatility over the observed period, rising from 14,714 million USD at the end of 2020 to a peak of 35,153 million USD in 2023, before falling sharply to 14,066 million USD in 2024. Adjusted net earnings followed a similar trajectory but consistently presented lower figures than reported earnings, indicating the impact of adjustments primarily related to income tax. The adjusted earnings' peak in 2023 was 31,094 million USD, followed by a decline to 11,883 million USD in 2024.

Shareholders’ Equity

Reported shareholders’ equity increased steadily from 63,278 million USD in 2020 to a high of 76,804 million USD in 2022, after which it declined to 68,774 million USD in 2023 and modestly recovered to 71,490 million USD in 2024. Adjusted shareholders’ equity mirrored this pattern but was consistently lower than reported equity, suggesting adjustments that decreased the equity base. Notably, adjusted equity peaked at 74,055 million USD in 2022 before decreasing to 62,688 million USD in 2023 and slightly rising to 63,477 million USD in 2024.

Return on Equity (ROE)

Reported ROE showed considerable fluctuations, starting at 23.25% in 2020, increasing to 28.2% in 2021, then declining to 23.36% in 2022, followed by a sharp increase to 51.11% in 2023 before falling to 19.68% in 2024. Adjusted ROE displayed a similar trend but with marginally lower values, peaking at 49.6% in 2023. The 2023 spike in both reported and adjusted ROE indicates an exceptional profitability period relative to the equity base, likely driven by the significant net earnings increase that year.

General Observations

The data reflects a pronounced peak in profitability in 2023, which is not sustained into 2024, as indicated by the decline in both net earnings and ROE. Equity levels, both reported and adjusted, exhibit growth until 2022 before declining in 2023 and showing minor recovery in 2024. The consistent discrepancy between reported and adjusted figures suggests the importance of income tax and other adjustments in interpreting the company's financial health. The volatility in earnings and ROE highlights the need for cautious analysis regarding the sustainability of performance trends.

Reported Net Earnings

Reported net earnings demonstrated an overall volatile trend over the observed periods. Starting at $14,714 million in 2020, the figure increased significantly to $20,878 million in 2021 before declining to $17,941 million in 2022. A notable surge occurred in 2023, reaching a peak of $35,153 million, followed by a sharp decrease to $14,066 million in 2024. This pattern suggests fluctuations in profitability, with a particularly strong performance in 2023 that was not maintained into the following year.

Adjusted Net Earnings

Adjusted net earnings followed a similar trajectory but at slightly lower levels compared to reported figures. From $13,573 million in 2020, the adjusted earnings rose to $18,799 million in 2021 and then declined progressively to $16,278 million in 2022. A substantial increase was seen in 2023, reaching $31,094 million, after which adjusted earnings fell sharply to $11,883 million in 2024. The adjustment appears to smooth variations somewhat but the volatility and peak in 2023 remain pronounced.

Reported Total Assets

Reported total assets showed moderate fluctuations over the time frame. Beginning at $174,894 million in 2020, total assets increased steadily to $182,018 million in 2021 and $187,378 million in 2022. However, in 2023 there was a noticeable decline to $167,558 million, followed by a partial recovery to $180,104 million in 2024. The decline in 2023 may correspond with the peak in net earnings, potentially reflecting asset disposition or revaluation factors.

Adjusted Total Assets

The adjusted total assets mirrored the pattern of reported assets but consistently recorded lower values. Starting at $166,360 million in 2020, adjusted assets rose to $171,795 million in 2021 and further to $178,255 million in 2022. A decrease to $158,279 million was observed in 2023, followed by a rise to $169,643 million in 2024. The adjustments indicate a similar asset base trend but with conservative valuations.

Reported Return on Assets (ROA)

Reported ROA showed significant variability across the periods, aligning closely with net earnings fluctuations. It increased from 8.41% in 2020 to 11.47% in 2021, then declined to 9.57% in 2022. A sharp spike occurred in 2023, reaching 20.98%, the highest level observed, before falling back to 7.81% in 2024. The 2023 performance notably exceeded previous years, suggesting an unusually high profitability relative to asset base that year.

Adjusted Return on Assets (ROA)

Adjusted ROA similarly followed the overall trend of the reported ROA but at slightly reduced levels. It rose from 8.16% in 2020 to 10.94% in 2021, then declined to 9.13% in 2022. In 2023, adjusted ROA surged sharply to 19.65%, before dropping to 7.00% in 2024. The adjusted metric confirms the exceptional growth in asset efficiency and profitability in 2023, though this was not sustained.

Summary of Trends and Insights

The financial data reveals a pattern of strong performance in 2021 followed by a moderation in 2022, with a remarkable peak in earnings and asset efficiency in 2023. However, this peak was followed by a substantial downturn in 2024 across all major metrics, including net earnings and ROA. Total assets declined in 2023 and partially recovered in 2024, indicating possible asset reallocation or other balance sheet adjustments during period fluctuations. Adjusted figures consistently show a similar trend but with moderated volatility, suggesting that adjustments provide a more conservative and stable view of financial performance. The marked increase in 2023 across profitability and asset efficiency metrics points to an exceptional event or operational success which was not maintained in the subsequent year.