Conduct an analysis of the financial performance of Pfizer comapny and Johnson and Johnson company these two companies are from a specific sector using their financial statements. Students are expected to submit the written reports following the guidelines below:

1. Briefly introduce the industry.

2. Introduce each company by performing a brief analysis of their business activities and business strategy. Describe the firms competitive advantages/disadvantages.

3. Reformulate the balance sheets and the income statements of each firm for the last three years. You must use the companys original financial statements as the basis. Submit the reformulated balance sheets and income statements in the Excel file. In the Excel file, state all the assumptions.

4. Prepare common-size income statements and balance sheets for each firm for the past three years. Submit them in the Excel file.

5. Compute each firms liquidity ratios, solvency ratios, activity ratios, and profitability ratios (see the specific ratios below) for the past three years. Submit them in the Excel file. a) Liquidity ratios: Current ratio, quick ratio, cash ratio, and cash conversion cycle b) Solvency ratios: Debt to equity ratio, long-term debt to equity ratio, and interest coverage ratio c) Activity ratios: Inventory turnover, DOH, receivables turnover, DSO, payables turnover, number of days of payables, and asset turnover d) Profitability ratios: Decompose ROE Use the average of the beginning and the ending balance sheet numbers for ratios (e.g., receivables turnover) that use both the income statement and the balance sheet items. If the ratio uses the balance sheet items for both the numerator and the denominator, you only need to use the ending balance sheet number. Four years of financial statements are needed to compute the ratios for three years.

6. Based on each firms ratio analyses above, discuss the companys performance over the past three years. Link the discussion with the firms strategy and business model. Compare two firms performance.

7. What would you recommend to the CFO of each company to improve its financial performance?