A side by side financial analysis comparison of financial ratios for Johnson&Joh

Question

A side by side financial analysis comparison of financial ratios for Johnson&Johnson and Proctor &Gamble for the years 2014 thru 2016.

These ratios

Performance Measures Market Value Added Market-to-Book Ratio MVAmarket capitalization - equity book value Market capitalization-(#shares) (price per share) "market value of equity" /"book value of equity" Profitability Measures Return on Assets (ROA) Return on Capital (ROC) "after-tax operating income" /"total assets" or "asset turnover" x "operating profit margin" "after-tax operating income" /"total capitalization" "net income" /"equity" or "leverage ratio" x "asset turnover" × "operating profit margin" × "debt burden" Leverage Ratio "assets" /"equity" Debt burden "net income" /"after-tax operating income" Return on Equity (ROE) after tax op income-(cost of capital total capitalization) After tax operating income-[(1-tax rate) x interest expense] + net income Total capitalization long-term debt + shareholder's equity Economic Value Added (EVA) Efficiency Measures Asset Turnover Receivables Turnover Average Collection Period (days) "receivables at start of year" /"average daily sales" Inventory Turnover Average Days In Inventory Profit Margin Operating Profit Margin "sales"/"total assets at start of year" or "sales" /"receivables at start of year" "cost of goods sold" /"inventory at start of year" "inventory at start of year" /"cost of goods sold/365" Net Income"/"Sales" after-tax operating income /"sales" Financial Leverage Measures Long-term Debt Ratio Long-term Debt-Equity Ratio Total Debt Ratio Times Interest Earned Cash Coverage Ratic "long-term debt" /"long-term debt equity" "long-term debt" /"equity" "total liabilities" /"total assets" "EBIT" /"interest payments" ***EBIT is Earnings Before Income Taxes*** "EBITdepreciation"/"interest payments" Liquidity Measures Net Working Capital to Assets Current Ratio Quick Ratio Cash Ratio "net working capital"/"total assets" net working capital "total current assets" - "total current liabilities" "current assets" /"current liabilities" "cash marketable securitiesreceivables" /"current liabilities" "cash marketable securities" /"current liabilities"

Explanation / Answer

Source for financials:

https://finance.yahoo.com/quote/JNJ/financials?p=JNJ

https://finance.yahoo.com/quote/PG/financials?p=PG

All values calculated for 2016 year

1) Market to Book ratio:

J&J: = 370.74 bn / 71.15 bn = 5.21

P&G: = 224.34 bn / 57.341 bn = 3.91

2) ROA ratio:

J&J: 15,409 / 133,411 = 11.55%

P&G: 10,508 / 127,136 = 8.26%

3) ROE:

J&J:  15,409 / 71,150 = 21.65%

P&G: 10,508 / 57,341 = 18.32%

4) Asset turnover:

J&J: 70,074 / 130,358 = 53.75%

P&G: 65,299 / 129,495 = 50.42%

Note for 4- Previous year's Asset is taken as according to the defination, Assets at the start of the year is taken.

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