Johnson & Johnson (NYSE:JNJ)

Debt to Equity

The debt to equity ratio shows moderate fluctuations over the periods analyzed. Initially, it increased from 0.45 in March 2020 to a peak of 0.59 in September 2020, followed by a gradual decline to 0.43 by July 2022. Subsequently, a notable increase is observed reaching 0.75 in April 2023, followed by a sharp decrease to 0.42 in October 2023. Afterwards, the ratio trends upward again, ending at 0.65 by June 2025. This indicates varying levels of leverage with periods of both conservative and more leveraged capital structures.

Debt to Capital

This ratio follows a broadly similar pattern to debt to equity, with an increase from 0.31 in March 2020 to 0.37 by September 2020. It then declines slightly and stabilizes around 0.30 through mid-2022. A notable surge is seen in early 2023, rising to 0.43 in April 2023 before descending to 0.30 by October 2023. The ratio then climbs once more, finishing near 0.39 by mid-2025. Such dynamics suggest changes in the company's capital structure composition, including increased dependence on debt in certain quarters.

Debt to Assets

The debt to assets ratio exhibits an upward trend from 0.18 in March 2020 to 0.22 in September 2020, followed by a decrease to approximately 0.18 by October 2022. A marked increase occurs in April 2023 (0.27), with a subsequent dip and minor fluctuations through the later periods, ending near 0.26 in June 2025. This pattern aligns with the observations in debt to equity and debt to capital, reflecting shifts in asset financing and debt utilization.

Financial Leverage

Financial leverage remains relatively stable over the period, with minor oscillations between 2.33 and 2.77. The highest leverage of 2.77 is recorded in April 2023, coinciding with peaks in debt-related ratios. The lowest point, around 2.33, occurs both in October 2022 and again in October 2023. This indicates consistent use of debt relative to equity, with some increased leverage around early 2023 and fluctuations thereafter.

Interest Coverage

Interest coverage data is available starting September 2020, showing an initially strong capacity to cover interest expenses, peaking at 164.15 in July 2022. From this peak, the ratio declines sharply through 2023, falling to 19.09 by December 2023. The interest coverage stabilizes somewhat thereafter, remaining in the 20-34 range through mid-2025. This decline suggests either rising interest expenses or reduced earnings before interest and taxes, indicating a reduced buffer to meet interest obligations in more recent periods.

Total Debt

The total debt exhibits fluctuations over the reported periods. Starting at approximately $27.6 billion in March 2020, it increased steadily, peaking near $37.8 billion in September 2020 before declining to about $29.9 billion in October 2023. After this trough, the debt level rose again, reaching over $52 billion by June 2025. Notably, there was a sharp increase in debt in December 2022 and again by mid-2025, indicating periods of significant borrowing or financing activities.

Total Shareholders’ Equity

Shareholders’ equity demonstrated a general upward trend with minor fluctuations. Starting from roughly $61.3 billion in March 2020, it increased steadily, peaking near $76.8 billion in December 2022. Afterward, the equity decreased during 2023, reaching about $68.8 billion in December 2023, before recovering and increasing again towards mid-2025, reaching approximately $78.5 billion. The general growth in equity indicates an accumulation of retained earnings or new equity infusions over time, although some volatility is observed in recent years.

Debt to Equity Ratio

The debt to equity ratio shows variability consistent with the movements in debt and equity. It started at 0.45 in March 2020, increasing to a high of around 0.59 by September 2020, then generally declining to approximately 0.42 by October 2023. Subsequently, the ratio increased again, reaching a peak of 0.75 in April 2023, before declining slightly to around 0.65 by June 2025. These fluctuations suggest changing leverage strategies, with periods of increased reliance on debt capital, particularly notable spikes in early 2023 and mid-2025.

Overall Analysis

Over the examined timeframe, the company experienced cyclical variations in debt levels and equity, influencing the leverage ratio. The periods of increased debt correspond with rises in the debt-to-equity ratio, pointing to strategic borrowing likely aimed at financing growth, acquisitions, or other capital-intensive activities. The growth in equity despite these debt increases indicates sustained profitability or capital injections. The decline in debt levels between late 2021 and late 2023 suggests a phase of deleveraging or repayment. However, renewed increases in debt and leverage after 2023 possibly reflect a shift back towards higher debt utilization. These patterns indicate evolving capital structure management in response to operational or market conditions.

The analysis of the quarterly financial data reveals several notable trends in the company's leverage and capital structure over the reported periods.

Total Debt

Total debt exhibited a generally increasing trend from March 29, 2020, reaching a peak around December 31, 2022. Initially, debt rose from approximately $27.6 billion to about $39.7 billion by the end of 2022. Following this peak, total debt experienced fluctuations, with a significant decrease observed in late 2023 down to roughly $29.9 billion by December 31, 2023. However, it increased again into the subsequent quarters, surpassing $50 billion by June 29, 2025. This pattern indicates periods of increased borrowing possibly followed by partial repayment or refinancing actions, along with renewed borrowing in later quarters.

Total Capital

Total capital showed a steady upward trajectory from approximately $88.9 billion at the beginning of the period to a high of about $130.4 billion by mid-2025. Despite minor dips in some quarters, the overall trend points to growth in the capital base. This increase could be associated with retained earnings, capital injections, or other forms of equity increases, reflecting strengthening of the company’s financial resources over time.

Debt to Capital Ratio

The debt to capital ratio fluctuated between 0.30 and 0.43 across the quarters, reflecting changes in the relative proportion of debt financing to total capital. Initially, the ratio rose moderately from 0.31 to around 0.37 during 2020, then decreased slightly in 2021 to the 0.30–0.31 range. However, a notable increase appeared in the latter part of 2022, peaking near 0.43, which aligns with the surge in total debt observed. By late 2023, the ratio declined back near 0.30, coinciding with a reduction in debt levels. Subsequent quarters exhibited a gradual increase again, reaching around 0.39 by mid-2025. These shifts suggest varying leverage strategies, balancing debt and equity financing in response to operational and market conditions.

In summary, the data shows an overall growth in total capital with fluctuating total debt levels that caused corresponding variations in the debt to capital ratio. Periods of increased borrowing were followed by debt reductions, indicating active management of capital structure to optimize financial leverage. These dynamics demonstrate the company's responsiveness to financial strategy needs over the analyzed timeframe.

The financial data reflects the company's balance sheet trends over several quarters from March 2020 through June 2025. A detailed analysis reveals changes in total debt, total assets, and the debt to assets ratio over this period.

Total Debt

The total debt figures show variability across the observed quarters. Initially, there is a general increase from US$27,583 million in March 2020 to a peak of US$37,758 million in September 2020, followed by fluctuations hovering mostly between US$29,000 million and US$34,000 million until late 2022. A significant surge in total debt is evident in December 2022, reaching US$39,659 million, escalating sharply to US$52,907 million in April 2023. Subsequent quarters exhibit considerable volatility with the debt decreasing to US$29,921 million by October 2023, before rising again to US$52,252 million in March 2025 and maintaining elevated levels around US$50 billion by mid-2025. This pattern suggests periods of increased leverage interspersed with debt reduction phases.

Total Assets

Total assets generally increase over the timeline, moving from US$155,017 million in March 2020 to a high of approximately US$195,969 million in April 2023. Thereafter, assets decline notably to around US$166,061 million by October 2023 but recover steadily to near US$193,671 million by March 2025, with a slight reduction to US$193,389 million by June 2025. This overall growth with intermittent decreases could indicate asset acquisitions, disposals, or valuation changes over time.

Debt to Assets Ratio

The debt to assets ratio reflects the company’s leverage relative to its asset base. Starting at 0.18 in March 2020, the ratio peaks at 0.22 in September 2020 before settling mostly between 0.18 and 0.20 for the next several quarters. A noticeable increase occurs in December 2022 and April 2023, with the ratio rising to 0.21 and 0.27 respectively, aligning with the surge in total debt during this period. After dropping back to 0.18 in October 2023, the ratio elevates again to 0.27 by March 2025, indicating a higher proportion of debt relative to assets toward the end of the observed timeframe. The ratio's fluctuations correspond closely with the changes in total debt and asset levels, illustrating cyclical shifts in financial leverage.

In summary, the data highlights a cyclical debt pattern, with periods of aggressive borrowing followed by reductions. Total assets exhibit an overall upward trajectory, albeit with occasional declines. The debt to assets ratio demonstrates corresponding leverage changes, signaling strategic adjustments in the company's capital structure over the reported quarters.

The analysis of the quarterly financial data reveals several key trends regarding assets, equity, and financial leverage.

Total Assets

Total assets exhibited a general upward trend from March 2020 to June 2024, starting at approximately 155 billion US dollars and peaking around 193 billion US dollars by June 2025. Notably, there was a significant increase from December 2022 onwards despite a dip in mid-2023. A marked drop is visible in October 2023 but was followed by a recovery and further growth through the end of the series.

Total Shareholders’ Equity

Shareholders' equity also generally increased over the period but with more fluctuations compared to total assets. Beginning near 61 billion US dollars in early 2020, equity rose steadily through mid-2021 and again in mid-2023, reaching a peak around 78 billion US dollars by mid-2025. However, intermittent declines are present, particularly from late 2022 through early 2024, indicating some variability in equity values.

Financial Leverage

The leverage ratio showed volatility but remained within a relatively narrow range between approximately 2.3 and 2.8 throughout the period. There was a higher leverage in late 2020 to early 2021, declining around mid-2021, then rising again late 2022 and fluctuating thereafter. Overall, the ratio suggests consistent use of debt relative to equity with short-term increases potentially linked to equity fluctuations or asset changes.

In summary, the data indicates growth in total assets and equity over the analyzed quarters, albeit with some volatility in equity. Financial leverage remained moderately stable with periods of increased leverage correlating with equity downturns. This pattern suggests a strategic balance in capital structure, with temporary increases in leverage potentially used to support asset growth or manage financing needs during weaker equity periods.

The earnings before interest and tax (EBIT) demonstrate considerable volatility over the observed periods. Initially, EBIT shows a decline from 6,534 million US dollars in March 2020 to a notable trough of 1,734 million in December 2020. This is followed by a significant recovery and fluctuations throughout 2021 and 2022, with values peaking again at 6,523 million in July 2023 before experiencing another downturn in subsequent quarters. Noteworthy is the sharp negative EBIT recorded in April 2023 (-1,075 million), indicating a substantial operational challenge or extraordinary loss during that period. The later quarters up to June 2025 exhibit a general upward trend culminating in a peak of 13,835 million in March 2025, indicating a strong rebound and growth phase.

Interest expense, net of the portion capitalized, reveals a pattern of irregular fluctuations without a clear trend. The values oscillate between lows such as 10 million in April 2022 and highs reaching 308 million by June 2025. The increase in interest expense towards the later periods suggests either increased borrowing, higher interest rates, or changes in capital structure affecting financing costs.

The interest coverage ratio, which indicates the company's ability to meet interest obligations from operating earnings, shows significant changes. Data is absent for early periods, but from December 2020 onwards, extremely high coverage ratios (well over 70 and peaking above 164) imply strong EBIT relative to interest expenses during 2021 and early 2022. However, a notable decline is observed from mid-2023, reaching figures around 19 to 34 in subsequent quarters, suggesting decreased operational earnings relative to interest costs. Despite this decline, the ratio remains above 19, reflecting that the company generally maintains an adequate ability to cover interest expenses, albeit with a reduced margin compared to earlier highs.

In summary, the operational earnings (EBIT) show a volatile but ultimately improving trajectory with a significant recovery phase post-2023. Interest expenses fluctuate without a consistent pattern but show an increase in the later periods. The interest coverage ratio reflects periods of robust earnings relative to interest obligations but also highlights potential concerns in the most recent periods due to declining coverage despite still satisfactory levels.