• Johnson & Johnson incurred $2.5 billion in research and development (R&D) expenses for developing new pharmaceutical products. The company provided the following financial figures:
  • R&D Expenses: $2.5 billion
  • Total Revenue: $80 billion
  • Cost of Goods Sold: $30 billion
  • Net Income: $15 billion

• Requirements:
  1. Compute Johnson & Johnson's operating profit margin after accounting for R&D expenses.
  2. Prepare a comparative income statement showing the impact of R&D expenses on net income.
  3. Analyze the strategic benefits of investing in R&D for Johnson & Johnson.
  4. Discuss the classification of R&D expenses in Johnson & Johnson's financial statements.
  5. Evaluate the impact of R&D investments on Johnson & Johnson's long-term growth prospects.