Johnson and Johnson - For use with WACC Assessment Johnson & Johnson (JNJ) NYSE - NYSE Delayed Price. Currency in USD Add to watchlist 88 Visitors trend 2W 10W 9M 142.09 -0.12 (-0.08%) 142.25 +0.16 (0.11%) At close: June 21 4:00PM EDT Pre-Market: 8:47AM EDT Buy Sell Summary Company Outlook NEW Chart Conversations Statistics Historical Data Profile Financials Analysis Options Hol Previous Close 142.21 Market Cap 377.257B 1D 5D 1M 6M YTD 1Y 5Y Max Full screen 142.80 Open 141.46 Beta (3Y Monthly) 0.73 Bid 142.25 x 900 PE Ratio (TTM) 142.18 26.33 Ask 142.50 x 1000 EPS (TTM) 5.40 141.467 Day's Range 141.01 - 142.43 Earnings Date Jul 16, 2019 52 Week Range 120.11 148.99 Forward Dividend & Yield 140.80 3.80 (2.67%) Volume 11.137.199 Ex-Dividend Date 2019-05-24 Avg. Volume 6,706,777 1y Target Est 10 AM 12 PM 2 PM 4 PM 149.17 Trade prices are not sourced from all markets Analyst Recommendation BUY by Argus Research Fair Value View details Overvalued All Short Term Mid Term Long Term All News Press Releases Research Reports NEW Ex/Eff Date Type Cash Amount Declaration Date Record Date Payment Date 5/24/2019 Cash 0.95 4/25/2019 5/28/2019 6/11/2019 2/25/2019 Cash 0.9 1/2/2019 2/26/2019 3/12/2019 11/26/2018 Cash 0.9 10/18/2018 11/27/2018 12/11/2018 8/27/2018 Cash 0.9 7/16/2018 8/28/2018 9/11/2018 5/25/2018 Cash 0.9 4/26/2018 5/29/2018 6/12/2018 2/26/2018 Cash 0.84 1/2/2018 2/27/2018 3/13/2018 11/27/2017 Cash 0.84 10/19/2017 11/28/2017 12/12/2017 8/25/2017 Cash 0.84 7/17/2017 8/29/2017 9/12/2017 5/25/2017 Cash 0.84 4/27/2017 5/30/2017 6/13/2017 2/24/2017 Cash 0.8 1/3/2017 2/28/2017 3/14/2017 11/18/2016 Cash 0.8 10/21/2016 11/22/2016 12/6/2016 8/19/2016 Cash 0.8 7/18/2016 8/23/2016 9/6/2016 5/20/2016 Cash 0.8 4/28/2016 5/24/2016 6/7/2016 2/19/2016 Cash 0.75 1/4/2016 2/23/2016 3/8/2016 11/20/2015 Cash 0.75 10/22/2015 11/24/2015 12/8/2015 8/21/2015 Cash 0.75 7/20/2015 8/25/2015 9/8/2015 5/21/2015 Cash 0.75 4/23/2015 5/26/2015 6/9/2015 2/20/2015 Cash 0.7 1/5/2015 2/24/2015 3/10/2015 11/21/2014 Cash 0.7 10/16/2014 11/25/2014 12/9/2014 8/22/2014 Cash 0.7 7/21/2014 8/26/2014 9/9/2014 5/22/2014 Cash 0.7 4/24/2014 5/27/2014 6/10/2014 Other Assumptions: 1. Market return for equities - 11% 2. Risk free rate - 3% 3. JNJ has a 10-year bond issue that is currently priced at 102. It was issued three years ago with a coupon rate of 2.45%. Use this bond's YTM as a pre-tax cost of long-term debt. Assets Current assets Cash and cash equivalents (Notes 1 and 2) Marketable securities (Notes 1 and 2) JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At December 30, 2018 and December 31, 2017 (Dollars in Millions Except Share and Per Share Amounts) (Note 1) Accounts receivable trade, less allowances for doubtful accounts $248 (2017,$291) Inventories (Notes 1 and 3) Prepaid expenses and other receivables Assets held for sale (Note 20) Total current assets Property, plant and equipment, net (Notes 1 and 4) Intangible assets, net (Notes 1 and 5) Goodwill (Notes 1 and 5) Deferred taxes on income (Note 8) Other assets Total assets Liabilities and Shareholders' Equity Current liabilities 2018 2017 18,107 17,824 1,580 472 14,098 13,490 8,599 8,765 2,699 2,537 950 46,033 43,088 17,035 17,005 47,611 53,228 30,453 31,906 7,640 7,105 4,182 4,971 152,954 157,303 Loans and notes payable (Note 7) 2,796 3,906 Accounts payable 7,537 7,310 Accrued liabilities 7,601 7,304 Accrued rebates, retums and promotions 9,380 7,210 Accrued compensation and employee related obligations 3,098 2,953 Accrued taxes on income (Note 8) 818 1,854 Total current liabilities 31,230 30,537 Long-term debt (Note 7) 27,684 30,675 Deferred taxes on income (Note 8) 7,506 8,368 Employee related obligations (Notes 9 and 10) 9,951 10,074 Long-term taxes payable (Note 8) 8,242 8,472 Other liabilities 8,589 9,017 Total liabilities 93,202 97,143 Shareholders' equity Preferred stock-without par value (authorized and unissued 2,000,000 shares) Common stock-par value $1.00 per share (Note 12) (authorized 4,320,000,000 shares; issued 3,119,843,000 shares) 3,120 3,120 Accumulated other comprehensive income (loss) (Note 13) (15,222) (13,199) Retained eamings 106,216 101,793 94,114 91,714 Less: common stock held in treasury, at cost (Note 12)(457,519,000 shares and 437,318,000 shares) Total shareholders' equity 34,362 31,554 59,752 60,160 Total liabilities and shareholders' equity 152,954 157,303 See Notes to Consolidated Financial Statements JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars and Shares in Millions Except Per Share Amounts) (Note 1)* 2018 2017 Sales to customers 81,581 76,450 Cost of products sold 27,091 25,439 Gross profit 54,490 51,011 Selling, marketing and administrative expenses 22,540 21,520 Research and development expense 10,775 10,594 In-process research and development 1,126 408 Interest income (611) (385) Interest expense, net of portion capitalized (Note 4) 1,005 934 Other (income) expense, net 1,405 (42) Restructuring (Note 22) 251 309 Eamings before provision for taxes on income 17,999 17,673 Provision for taxes on income (Note 8) 2,702 16,373 Net earnings 15,297 1,300 For JNJ, what is the cost of equity (a.k.a. required return on equity) using the Gordon Growth model? Question options: 7.3% 9% 3% 11% 18% 13% For JNJ, what is the cost of equity using the CAPM approach? Round to nearest whole percentage. Question options: 3% 12% 11% 6% 9% For JNJ, what is the pre-tax cost of debt (YTM) using current market information? Question options: 2.5% 2.1% 2.6% 6.9% What is JNJ's tax rate for the last year? Question options: 28% 15% 0% 39.6% 20% For JNJ, what is the amount of total capital (assume no preferred stock) Question options: $315bn $405bn $496bn $40bn For JNJ, what is the WACC? Assume you use the average of Gordon Growth and CAPM for the cost of equity. Question options: 2.8% 9.8% 8.4% 15.3% 10.4% 3.4%