Web research: Consolidated Statements of Cash Flows

Go to the website of Johnson & Johnson at http://www.jnj.com. Click on Annual Reports and Proxy under Investor Relations. Then open the most recent Annual Report and click on Financials. Click on Consolidated Financial Statements and then Consolidated Statements of Cash Flows. Examine the operating, investing, and financing activities sections.

What is the most significant source of cash for Johnson & Johnson? What is the most significant use of cash for Johnson & Johnson? Why do you think these sources and uses are significant for this company?

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My Response:
Jill Stidd
20 Oct 08 10:22 PM MST

Initial Post: Jill Stidd

In 2007 it seemed most significant source of cash for Johnson & Johnson was from their pharmaceutical lines, with 41% of their sales at $24.9 billion dollars, Topamax increased it revenues the most at a large 21% and misc “other” had the most sales at 5.4 billion. Medical Devices and Diagnostics is the next in line with 35% of their sales at $21.7 billion dollars, vision care grew the most in this category with an 18% increase. However Depuy had the most sales in billions at 4.6.

I determined from my analysis of the statement of cash flows that the most significant use of cash was for retirement of short-term debt at $21,691. With all there research and development expenses I would think that it would produce some debt. However it seems they were very aggressive in paying that back. That always looks great to stockholders.

I thought I would give a stab at evaluation financial analysis of cash flows for Johnson and Johnson using the calculations we were given in our text page 712.

Cash flows from operating activitiesLess: Investments in fixed assets to maintain current productionFree cash flow$15,249 (Cash flows from operating activities) - $2,942 (Additions to property, plant and equipment) = $12,307 which is a positive cash flow and would because you would use this formula to evaluate retiring debt as just one example it seems they had enough cash flow to retire the amount of debt that they did.