Johnson & Johnson (NYSE:JNJ)

The analysis of the financial performance indicators over the observed periods reveals several noteworthy trends and fluctuations in key financial ratios.

Return on Assets (ROA)

The ROA demonstrates considerable variability throughout the quarters. Initially, it held steady around the 9% to 11% range, peaking at 11.47% in December 2021. This was followed by a decline reaching a low of approximately 6.49% in April 2023. Subsequently, a significant rebound occurred, with ROA surging to over 20% in the latter part of 2023 and early 2024. However, this spike was not fully sustained, as the ratio dropped again to around the 8-11% range in late 2024 and into 2025, indicating fluctuating asset efficiency and profitability in the medium term.

Financial Leverage

The financial leverage ratio remained relatively stable across the period, with minor oscillations between roughly 2.33 and 2.77. Starting at 2.62, the ratio slightly trended downward toward mid-2022 at about 2.33, followed by a brief increase to 2.77 in early 2023. Thereafter, it moderated and stayed in the vicinity of 2.44 to 2.48 towards mid-2025. This consistency suggests a steady use of debt relative to equity in the company’s capital structure with no significant shifts in financial risk.

Return on Equity (ROE)

The ROE showcased more pronounced fluctuations. Early values were in the 22% to 28% range, indicating solid profitability relative to shareholders’ equity. Notably, there was a substantial increase late in 2023 and early 2024 where ROE nearly doubled, reaching peaks above 50%. This sharp rise denotes a period of exceptional equity profitability, likely reflecting enhanced operational performance or financial leverage effects. However, similar to ROA, this elevation was temporary, with ROE reverting to a moderate range of approximately 20% to 32% from late 2024 onwards. The pattern highlights episodic improvements in equity returns amid otherwise stable performance.

In summary, the company exhibited generally stable leverage levels with significant volatility in profitability ratios (ROA and ROE), characterized by intermittent spikes in late 2023 to early 2024. This suggests periods of enhanced efficiency or favorable operational conditions punctuating an otherwise steady financial strategy. Monitoring the sustainability of these profitability peaks will be critical for future financial planning and performance assessment.

Net Profit Margin

The net profit margin demonstrates notable fluctuations over the periods. Initially, it increased from 17.95% in the first quarter of 2021 to a peak near 22.26% by the end of 2021. However, there is a decline observed in 2023, with values dropping to around 13.77% and 14.52%. Following this, a remarkable surge occurs in late 2023 to early 2024, reaching above 44%. Subsequently, the margin experiences volatility, declining again to the mid-teens in early 2025 before rising steadily to 27.26% by the end of the period.

Asset Turnover

Asset turnover remained relatively stable throughout the observed periods, fluctuating in a narrow band between 0.46 and 0.55. It started at 0.49 and slightly increased to 0.53 by late 2021. From 2022 onwards, minor variations occurred but with no clear upward or downward trend, suggesting consistent efficiency in asset use over the duration.

Financial Leverage

Financial leverage exhibits a general decreasing trend from 2.62 in early 2021 to a low near 2.33 in late 2022. Thereafter, some fluctuations are evident, with a brief peak around 2.77 in early 2023. The leverage ratio stabilizes mostly in the range of 2.44 to 2.53 during 2024 and into 2025, indicating moderate use of debt relative to equity, without drastic changes.

Return on Equity (ROE)

ROE mirrors the pattern seen in net profit margin with considerable variation. From an initial 22.96% in early 2021, it increased to nearly 28% by the end of that year. In 2023, ROE sharply declines to below 20%, followed by an extraordinary increase to above 54% in the late 2023 - early 2024 timeframe. Post this spike, ROE dips again to around 20% but trends upward steadily, reaching over 31% by the latest period observed.

The analysis of the quarterly financial ratios reveals several notable trends and fluctuations over the observed periods.

Tax Burden

This ratio generally exhibits a declining trend from early 2021 through mid-2025, starting at 0.87 and gradually decreasing to approximately 0.80 by the end of the observation period. The downward movement suggests a reduction in the proportion of earnings paid as taxes, which may reflect changes in tax strategies or tax rates.

Interest Burden

The interest burden remains relatively stable with minor fluctuations, consistently close to 0.98-0.99 through most periods, with a slight decrease towards 0.97 in the more recent quarters. This indicates a steady level of interest expense relative to earnings before interest and taxes, implying controlled financing costs.

EBIT Margin

The EBIT margin exhibits significant variability. It fluctuates around the low 20% range through the early to mid-periods, but there is a remarkable spike beginning in late 2022 and peaking in early 2024, reaching above 49%. After this peak, it drops back towards the 20-35% range but remains elevated compared to the earlier periods. This pattern may reflect extraordinary performance factors or operational improvements that temporarily enhanced profitability before normalizing.

Asset Turnover

This ratio shows relative stability with a slight downward trend over the years, starting near 0.49 and marginally declining to about 0.46-0.48 in the latest periods. The subtle decrease indicates a small reduction in the efficiency of asset use to generate revenue, which could warrant further investigation into asset utilization or revenue dynamics.

Financial Leverage

Financial leverage ratios fluctuate within a range roughly between 2.33 and 2.77, with a peak occurring in early 2023. Towards mid-2025, the leverage trends downward to about 2.43. This indicates moderate reliance on debt financing with some variability, but generally a slight decline in leverage, suggesting a cautious approach to debt management.

Return on Equity (ROE)

The ROE mirrors the trends seen in EBIT margin, initially ranging between 23% and 28%, followed by a pronounced spike exceeding 50% in early 2024. Subsequently, it declines but remains above initial levels, settling in the 28-32% range in the later quarters. This pattern indicates periods of strong shareholder returns influenced by increased profitability and operational efficiency, with some reversion but sustained improved performance over the earlier baseline.

Overall, the data reveals periods of strong profitability and return marked by spikes in EBIT margin and ROE, accompanied by consistent yet slightly declining tax burden and asset turnover. Financial leverage remains moderate and stable, while the interest burden indicates disciplined financial cost management. These trends suggest episodes of enhanced operational performance within a generally steady financial structure.

Net Profit Margin

The net profit margin exhibits significant fluctuations over the observed periods. Initially, there is a moderate upward trend from 17.95% to 22.26% within the first year. This is followed by a slight decline and fluctuating values around the 19% to 21% range over the subsequent two quarters. A notable dip occurs in the early 2023 periods, dropping to a low near 13.77% before sharply increasing to an exceptional peak exceeding 44% by early 2024. After reaching this pinnacle, the margin declines rapidly, falling back to mid-teens around 16.74% by late 2024 but rises again towards the end of the dataset, ending near 27.26%. This pattern suggests considerable volatility in profitability performance, with periods of both significant improvement and decline.

Asset Turnover

The asset turnover ratio displays relatively stable behavior compared to the net profit margin. Starting near 0.49, it increases gradually to a peak of 0.55 by late 2022 before retreating slightly to around 0.50 by early 2024. Throughout the entire timeline, the ratio oscillates within a narrow band, mostly between 0.46 and 0.55, indicating consistent efficiency in using assets to generate sales. There is no evidence of major disruptions or sudden changes in asset utilization efficiency.

Return on Assets (ROA)

The return on assets follows a pattern roughly consistent with net profit margin trends but with less extreme variation. ROA initially increases from 8.76% to approximately 11.47% within the first year, signaling improving asset profitability. Subsequently, it remains mostly stable with minor declines and rises until early 2023 when it drops to around 6.49%. A substantial jump occurs soon after, coinciding with the surge in net profit margin, reaching a peak near 22.37% to 22.98% by early and mid-2024. The ratio then decreases again to below 8.5% in late 2024 but slightly recovers towards the end of the timeline, finishing above 13%. This pattern indicates that asset returns are sensitive to underlying profitability changes, though the swings are generally less pronounced than in net margin.

Tax Burden

The tax burden ratio remained relatively stable from April 2021 through mid-2022, fluctuating between 0.83 and 0.93. A decline occurred from late 2022 through mid-2023, where the ratio decreased and reached a low of 0.80 by mid-2025. This indicates a gradual reduction in the proportion of earnings paid as tax over the analyzed periods.

Interest Burden

The interest burden ratio showed high stability, staying close to 0.99 until early 2022. From April 2023 onward, a slight decline was observed, with values settling around 0.96 to 0.97, suggesting marginally higher interest expenses impacting earnings but overall remaining relatively consistent.

EBIT Margin

The EBIT margin showed fluctuations across the quarters. Initial values around 21-24% in 2021 and early 2022 dipped markedly to about 16-17% in early 2023, followed by a significant increase reaching over 44% at the end of 2023 and peaking near 49% around mid-2024. Subsequently, the margin decreased back to approximately 20% by early 2025 but showed signs of recovery, rising to over 35% later in 2025. This pattern indicates periods of volatility in operational profitability, with some quarters experiencing exceptional margin expansion.

Asset Turnover

The asset turnover ratio exhibited a generally stable trend with minor fluctuations. It increased gradually from around 0.49 in early 2021 to a peak near 0.55 by late 2022, then declined back to approximately 0.46-0.48 by mid-2025. This suggests variations in asset utilization efficiency but no dramatic changes over the observed periods.

Return on Assets (ROA)

The ROA followed a pattern similar to EBIT margin but at a lower scale. Starting around 8.76% in early 2021, it rose up to 11.47% toward the end of 2021, fluctuated around 10-11% through 2022, then dropped significantly to about 6.49%-6.81% in early 2023. A notable rebound occurred with ROA roughly tripling to above 20% at the end of 2023 and mid-2024 before declining again to near 8% in early 2025. The ROA then increased once more, ending at approximately 13% by mid-2025. This demonstrates periods of varying profitability relative to asset base, with pronounced volatility particularly in 2023 and 2024.

The financial ratios over the analyzed periods reveal several notable trends and fluctuations. The tax burden ratio shows a general decline from the initial periods through to the latest periods, indicating a smaller proportion of earnings being paid as taxes over time. It starts at 0.87 in early 2021, peaks around 0.93 in early 2022, and then trends downward to approximately 0.80 by late 2025.

The interest burden ratio remains relatively stable throughout the periods, fluctuating very slightly around the 0.97 to 0.99 range. This suggests that interest expenses relative to earnings before interest and taxes have been consistent and have not significantly impacted operating income.

Regarding profitability margins, the EBIT margin exhibits considerable volatility. Initially, it fluctuates between approximately 21% to 24% in 2021 and early 2022, followed by a sharp decline to the mid-teens in early 2023. Subsequently, there is a dramatic increase with margins rising to over 40% in late 2023 and early 2024, peaking at 49.25%. After this peak, the margin falls again to around 20% to 31% toward the end of the analyzed timeline, showing repeated periods of significant operational profitability changes.

The net profit margin follows a similar pattern to the EBIT margin, starting near 18% to 22% in 2021 and early 2022, dropping to about 13% to 15% in early 2023, and then surging sharply to nearly 45% in late 2023 and early 2024. Afterward, the margin decreases again toward the mid-to-upper teens and lower twenties toward the end of the examined timeframe, indicating variability in the company's bottom-line profitability consistency over the quarters.

Tax Burden

Decreases overall from 0.87 to 0.80, reflecting reduced tax relative to pre-tax earnings.

Interest Burden

Remains stable around 0.97 to 0.99, indicating steady interest cost burden.

EBIT Margin

Shows significant variability, with notable peaks above 40% in late 2023/early 2024 and troughs near 16% in early 2023.

Net Profit Margin

Mirrors EBIT margin movements with peaks close to 45% and lows near 14%, highlighting fluctuating net profitability.