Johnson & Johnson and Merck & Co., Inc. are competitors in the same line of business. Use
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Question:
Johnson & Johnson and Merck & Co., Inc. are competitors in the same line of business. Use the separate PDF which includes financial data for 2017-2019. For Part I – calculate the listed trends and ratios. For Part II – use the information from Part I to answer the two scenarios.
Part I:
- Calculate the dollar and percentage changes from 2017-2019 for cash, total assets, sales revenue, and net income.
- Calculate the following ratios for 2 years (show your formulas and calculations)
- Working Capital
- Current Ratio
- Quick Ratio
- Debt Ratio
- Return on Assets
- Return on Equity
- Receivables Turnover
- Average Collection Period
- Inventory Turnover
- Earnings Per Share
- Gross Profit Percentage
- Net Income as a Percentage of Sales
- P/E Ratio
Part II: Decision Making:
- Assume that you are the credit manager for a national bank. Both companies are seeking a significant loan (10% of total assets). Assess which company would you consider to be the safer credit risk and why.
- Assume that you are an investment broker seeking to purchase 10% of the outstanding stock for one of the two companies. Assess which company’s stock would you purchase and why.
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