Part 3: Scrubbing (12 points) Below are Se income statements for 3 years for Johnson &Johnson Johnson & Johnson cs n e health care field. The Company conducis business in vintually all countries of the wonld with the primary tocus on mgloyees woridwide engaged in the research and development, manufacture and sale of a broad 1. Fill in h the entire Scntbed 2017 Column based upon preparing a normalized or "scrubbed income statement for 2017. For wauld like you to assume you had all three years worth of indformation at the time of your anahysis. Indluded above the table is adisitional information about selected infonmation within the financial statements to assist you wlth your analysis of this enercise lock at three year analysis. (e.Iknow that you wouldn't have had 2018 when scnuibbing 2017, bu and Development (IPR&D): In 2018, the Company recorded an IPR&D charge of $1.1 billion relating to an Company recorded an IPR&D charge of $0.4 development projects related to Nowo which was acqein2015. The podd Phat is no longer being pursued. In addition, an impaiment charge of $0.3 billion was recorded for he discontinuation of the development project for an anti-thrombin antibody In 2017, the bilion Gevelopment was canceted due to safety concems. In 2016, the Company recorded an IPR&D charge of $29 million for the primarily for the discontinuation of discondinuation of a development program related to Crucell Other (income) Expense, Net: Other (income) expense, net is the account where the Company r he sale and wrtle do of certain investments in equity securities gains and losses on investments, gains a records gains and losses related to and losses on divestitures, acquisition-reliated costs and ltigation accruials and settlements. The_ny expects their tax tate to be between 15-17%. lfrates fall outside of those ranges,they recommend using 10%. Johnsen & Johnson resuts for 2017 $ 76,450 100 Scrubbed results for 2017 81,581, 10000% 21,789 30.31% 50,101 09.69% 25,439 33.28% 51,011 66.72% 10,594 13.86% 21.520 28.15% Gross profit 54,490 66.79% 10,775| 13,21% 22,540-2753% 0.31% 20,067 2791% 491-068% 290.04% 29,730 41.35% 20,371 28.34% 726 1.01% 2100.29% -051% 2755% 4S4% 16S40 230% , 251 309-040% Total operating expenses iscome from operations hterest expense Other fincomel expense 34,682 19,798 Loos 4% 42.52% 24.27% 1.23% 1.72% 0.75% 22.06% 331% 18.75% 32,831 18,180 934 (42) 17,673 16,373 4294% 23.78% 122% -005% 450% 23.12% 2142% 1.70% , (368) 1sa03 1,263 Income before ta Net income Equity 17.999 : 15,297 59,752 $ 1.300 60,160 23.78% 1.70% $ $ 70,418 Operating margin Proft marg 18.75% 23.01% Return on Equity 2.16% 23. A9% 2. Provide a brief explanation for any items you viewed as judgmental in your assessment to scrub or not to scrub. 3. What is the primary reason for the change in the profit margin between 2016 and 2017? Be as specific as Part 3: Scrubbing (12 points) Below are Se income statements for 3 years for Johnson &Johnson Johnson & Johnson cs n e health care field. The Company conducis business in vintually all countries of the wonld with the primary tocus on mgloyees woridwide engaged in the research and development, manufacture and sale of a broad 1. Fill in h the entire Scntbed 2017 Column based upon preparing a normalized or "scrubbed income statement for 2017. For wauld like you to assume you had all three years worth of indformation at the time of your anahysis. Indluded above the table is adisitional information about selected infonmation within the financial statements to assist you wlth your analysis of this enercise lock at three year analysis. (e.Iknow that you wouldn't have had 2018 when scnuibbing 2017, bu and Development (IPR&D): In 2018, the Company recorded an IPR&D charge of $1.1 billion relating to an Company recorded an IPR&D charge of $0.4 development projects related to Nowo which was acqein2015. The podd Phat is no longer being pursued. In addition, an impaiment charge of $0.3 billion was recorded for he discontinuation of the development project for an anti-thrombin antibody In 2017, the bilion Gevelopment was canceted due to safety concems. In 2016, the Company recorded an IPR&D charge of $29 million for the primarily for the discontinuation of discondinuation of a development program related to Crucell Other (income) Expense, Net: Other (income) expense, net is the account where the Company r he sale and wrtle do of certain investments in equity securities gains and losses on investments, gains a records gains and losses related to and losses on divestitures, acquisition-reliated costs and ltigation accruials and settlements. The_ny expects their tax tate to be between 15-17%. lfrates fall outside of those ranges,they recommend using 10%. Johnsen & Johnson resuts for 2017 $ 76,450 100 Scrubbed results for 2017 81,581, 10000% 21,789 30.31% 50,101 09.69% 25,439 33.28% 51,011 66.72% 10,594 13.86% 21.520 28.15% Gross profit 54,490 66.79% 10,775| 13,21% 22,540-2753% 0.31% 20,067 2791% 491-068% 290.04% 29,730 41.35% 20,371 28.34% 726 1.01% 2100.29% -051% 2755% 4S4% 16S40 230% , 251 309-040% Total operating expenses iscome from operations hterest expense Other fincomel expense 34,682 19,798 Loos 4% 42.52% 24.27% 1.23% 1.72% 0.75% 22.06% 331% 18.75% 32,831 18,180 934 (42) 17,673 16,373 4294% 23.78% 122% -005% 450% 23.12% 2142% 1.70% , (368) 1sa03 1,263 Income before ta Net income Equity 17.999 : 15,297 59,752 $ 1.300 60,160 23.78% 1.70% $ $ 70,418 Operating margin Proft marg 18.75% 23.01% Return on Equity 2.16% 23. A9% 2. Provide a brief explanation for any items you viewed as judgmental in your assessment to scrub or not to scrub. 3. What is the primary reason for the change in the profit margin between 2016 and 2017? Be as specific as