For this assignment, you will perform ratio analysis in order to compare two companies in the health care industry:
• Johnson & Johnson (JNJ)
• Pfizer (PFE)
In order to perform this analysis, you will need to select 4 ratios that you would like to evaluate and then find the values of the same 4 ratios for each company.
The Internet has a number of websites which provide financial profiles of publically traded companies. Many of these will provide financial ratios that have already been calculated for you. Examples includeMSN Money, Yahoo Finance, CNN Money, MarketWatch.com.
1. Lookup the financial profiles for the healthcare companies above (JNJ and PFE), then find their values for each of the 4 ratios you selected. Detailed instructions for using MSN Money are provided below; however, other sites will have the ratios as well.
• Go to MSN Money in your browser, you need to type in the company name or ticker symbol (e.g. PFE) in order to find the company information.
• With the company data displayed, scroll down to the Fundamentals on the left side of the page. This section contains already calculated ratios that you can use. Be sure to click on all of the fundamentals listed (not just the key statistics, but growth, profitability, etc.) to find numerous ratios that you can use.
Once you have the ratios values for each company, provide your own analysis of what the ratios are showing and how the companies compare to each other. Based on the ratios, which of the companies do you think is stronger financially and why?