Question

MarketWatch and the news organization Reuters posted the following announcement on January 23, 2007:
Excluding One-Time Expenses, Johnson & Johnson Beats Estimates
Johnson & Johnson released its fourth quarter 2006 earnings . . . announcing that net income rose to $2.17 billion (Earnings Per Share of $0.74), from $2.1 billion (EPS of $0.70) during the prior year quarter. Excluding a one-time charge surrounding the acquisition of Pfizer Inc.’s consumer healthcare unit, Johnson & Johnson earned $0.81 EPS.
The report goes on to say that financial analysts were expecting earnings per share of 79 cents.

REQUIRED:
a. Which earnings per share figure (the 74 cents actually earned or the 81 cents earned if the special charge is ignored) is more important to investors interested in Johnson & Johnson?
b. Were the financial analysts who follow Johnson & Johnson pleased with the company’s results?
c. What challenges will investors face when reviewing future financial statements of Johnson & Johnson?



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  • CreatedAugust 19, 2014
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