CASE STUDY:
Interim Chief Financial Officer Case Study:
Trinity Mother Frances Health System: Tyler, Texas
Warbird provides customized healthcare finance team, including an interim CFO, to help
leading health system move forward with key financial initiatives
The Opportunity
Recognized as a leader in quality and rated as the number one hospital in the state of Texas
for patient safety, Trinity Mother Frances Health System in Tyler was in need of financial
leadership after the retirement of its long-time CFO. Trinity had embarked on the
construction of a heart hospital and the installation of the EPIC electronic information
system yet days of cash-on-hand was strained and the organization was not prepared to
enter the bond market for financing.
The Solution
Lindsey Bradley, president and CEO of Trinity, turned to Warbird Consulting Partners.
Working with Warbird, Trinity was able to engage a customized team of healthcare finance
experts that included an interim chief financial officer through Warbird’s Healthcare CFO
Consulting Network, as well as key financial staff through Warbird’s On-Demand Services.
In addition to interim CFO Pamela Vukovich, a healthcare finance expert with more than 29
years’ professional experience, including 11 years as a chief financial officer, Warbird also
provided seasoned interim professionals to serve as internal audit director, tax manager
and director of physician services, as well as several financial analysts.
Working onsite with the Trinity executive leadership team three-to-four days a week, Pam
and the Warbird team collaborated with the hospital’s finance department to devise a
detailed plan of action to put the organization on financial track. With her expertise, Pam
spearheaded the development of a long-range financial plan that included a return-oninvestment analysis for the EPIC and heart hospital projects, and helped define the need for
bond financing for expected capital outlays in the next three years.
After the long-range plan was approved by the Trinity finance committee and executive
leadership team, Pam prepared the organization for review by Fitch and Moody’s. Trinity’s
current ratings were confirmed and Pam led the combined finance team in working with
investment bankers to execute a successful bond issue.
In addition to addressing the immediate financial challenges facing Trinity, Pam worked
with CEO Lindsey Bradley to restructure the finance department and its functions for longterm improvement, including instituting a department of internal audit, and defining its
responsibilities, staffing models and detailed audit programs. She also reviewed Trinity’s
investment practices and policies and recommended key changes in cash management and
investment allocations to Trinity’s finance committee. All of these changes were
implemented and have resulted in a more robust finance function with greater returns and
lower risk.
Finally, Pam worked with Lindsey and Trinity COO Ray Thompson to rewrite the CFO job
description and provided expert input during the selection process for a permanent CFO.
Trinity selected Joyce Hester, an internal candidate, and Pam has continued to consult with
Trinity as a mentor for the new CFO with regular update calls to provide counsel in the
areas of bond financing, investments and more.
Results
Warbird’s expertise in healthcare finance management and its ability to build a customized
On-Demand team to meet the hospital’s specific needs provided the following results for
Trinity Mother Frances Health System:
• New Chief Financial Officer
• New bond financing at attractive rates
• Established department of internal audit
• Robust investment policies, including new asset allocations for corporate and retirement
funds, and an improved cash management system
• Completed reviews of ratings, which were confirmed
• Restructured bond portfolio with reduced interest expense and lower risk
• Process to review and standardize physician incentive compensation programs
• New record keeping and investment management firm for the system’s 403(b) pension
plan, which resulted in significant annual savings to participants
• Long-range financial plan and model, which could be updated by Trinity staff in the future
• Standardized financial analysis and capital analysis
Total Assets
Total liabilities
Values
Average of 2017 Average of 2016 Average of 2015
157,303
141,208
133,411
97,143
70,790
62,261
Total Assets and Lia
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
Total Assets
otal Assets and Liabilities
Average of 2017
Average of 2016
Average of 2015
Total liabilities
JOHNSON & JOHNSON COMP
STATEMENT OF FINANCIAL P
AS AT December 31, 2017
(Dollars in Millions Escepts S
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Marketable securities
$
$
17,824
472
Account recievables, less allowances for doubtful debts accounts
Inventories
Prepaid expenses and other recievables
Total Current Assets
$
$
$
$
13,490
8,765
2,537
43,088
property, plant and equipments, net
Intagngible assets, net
Goodwill
Deferred taxes on income
Other assets
Total Assets
$
$
$
$
$
$
17,005
53,228
31,906
7,105
4,971
157,303
Liabilities and Shareholders' Equity
Current Liabilities
Loans and note payables
Account payables
Account liabilities
Accrued rebates, returns and promotions
Accrued compensation and employee obligations
Accrued taxes on income
Total current liabilities
$
$
$
$
$
$
$
3,906
7,310
7,304
7,210
2,953
1,854
30,537
Long-term debt
Deferred taxes on income
Employee related obligations
Long-term taxes payable
Other loabilities
Total liabilities
$
$
$
$
$
$
30,675
8,368
10,074
8,472
9,017
97,143
$
-
Shareholders' Equity
Preferred stock-without par value (authorized and unissued 2,000,000
shares)
Common stock - par value $1.00 per share (authorized 4,320,000,000
shares; issued 3,119,843,000 shares)
Accumulated others comprehensive income (loss)
Retained earnings
Total Equity
2017
$
$
$
$
3,120
(13,199)
101,793
91,714
Less common stock held in treasury, at cost (437,318,000 shares and
4133,332,000 shares)
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
$
$
$
31,554
60,160
157,303
NSON & JOHNSON COMPANY
TEMENT OF FINANCIAL POSITION
T December 31, 2017
ars in Millions Escepts Share and Per Share Amount)
percentage change
2016
2015 2016/2017
$
$
18,972 $
22,935 $
13,732
24,644
-6.05%
-97.94%
$
$
$
$
11,699
8,144
3,282
65,032
$
$
$
$
10,734
8,053
3,047
60,210
15.31%
7.63%
-22.70%
-33.74%
$
$
$
$
$
$
15,912
26,876
22,805
6,148
4,435
141,208
$
$
$
$
$
$
15,905
25,764
21,629
5,490
4,413
133,411
6.87%
98.05%
39.91%
15.57%
12.09%
11.40%
Total Current Assets
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$2017
2016
2015
Total Assets
$
$
$
$
$
$
$
4,684
6,918
5,635
5,403
2,676
971
26,287
$
$
$
$
$
$
$
7,004
6,668
5,411
5,440
2,474
750
27,747
-16.61%
5.67%
29.62%
33.44%
10.35%
90.94%
16.17%
$
$
$
$
$
$
22,442
2,910
9,615
9,536
70,790
$
$
$
$
$
$
12,857
2,562
8,854
10,241
62,261
36.69%
187.56%
4.77%
$160,000
$155,000
$150,000
$145,000
$140,000
$135,000
$130,000
$125,000
$120,000
2017
2016
-5.44%
37.23%
Total current liabilities
$31,000
$
$
$
$
$
3,120
(14,901)
110,551
98,770
$30,000
$
$
$
$
3,120
(13,165)
103,879
93,834
0.00%
-11.42%
-7.92%
-7.14%
$29,000
$28,000
$27,000
$26,000
$26,000
$
$
$
28,352 $
70,418 $
141,208 $
22,684
71,150
133,411
11.29%
-14.57%
11.40%
$25,000
$24,000
2017
2016
2015
Total liabilities
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$2017
2016
urrent Assets
Total Current Assets
2015
al Assets
Total Assets
2015
ent liabilities
Total current liabilities
2015
Total liabilities
Total liabilities
2015
Total Assets
Total Current Assets
Total current liabilities
Total Equity
Total liabilities
Total Liabilities and Shareholders' Equity
Total Shareholders' Equity
Values
Average of 2016 Average of 2017
141,208
157,303
65,032
43,088
26,287
30,537
98,770
91,714
70,790
97,143
141,208
157,303
70,418
60,160
J & J COMPANY'S ASS
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
Total Assets Total Current Total current
Assets
liabilities
J COMPANY'S ASSETS, LIABILITY AND EQUITY TOTALS
Average of 2016
Average of 2017
Total current Total Equity
liabilities
Total
liabilities
Total
Total
Liabilities and Shareholders'
Shareholders'
Equity
Equity
Running Head: FINANCIAL STATEMENTS ANALYSIS
Financial Statements Analysis – Johnson & Johnson Company
Tena Jones
Rasmussen College
April 11, 2018
1
FINANCIAL STATEMENTS ANALYSIS
2
Introduction
Johnson & Johnson Company is an American investment holding company whose
interest mainly lies in the manufacturing, research and development, and trade in a broad
assortment of products in the health sector. Its main core business revolves around production
and supply of pharmaceuticals, medical devices, and consumer goods. It is practically felt in
globally having subsidiaries in over 67 countries and its products finding their way into the
market of over 175 countries in the world. This essay will analyze the company’s financial
performance for the accounting period January 01, 2017 to December 31, 2017. We will
scrutinize, analyze and compare various financial parameters to help us understand the financial
performance of the company. Financial statements allow shareholders and stakeholders to
determine the financial health, efficiency, and profitability of a company. I will use financial
statements and statements of income contained in the 2017 annual report of Johnson & Johnson
Company.
Assets and Liabilities
In 2017, the total current assets for Johnson & Johnson Company were $43,088 million
and the total current liabilities were $30,537. The current assets decreased sharply compared to
2016 where the value was $65,032 which was attributed to the large sale of marketable securities
held by the company. Current liabilities, on the other hand, increased by $ 4,250 million from the
previous $26,278 million in 2016. The current assets were greater than the current liabilities
which show that the company was in a good position to offset its liabilities. The current ratio for
the year was 1.4 percent which was a significant drop from the previous years’ of 2.5.
FINANCIAL STATEMENTS ANALYSIS
3
Cash Flow
Cash flow statements show the movement of cash that is cash inflow and cash outflows
of a company for a certain fiscal year. It provides information about a company's receipts and
payments hence used to determine whether the company can generate positive cash flows in
future periods. It is also a measure of the company's ability to pay its short-term debts when they
fall due. The cash, in this case, constitute of cash at hand or bank and cash equivalents such as
government securities. Cash flow from operating activities is the cash that arises from
transactions that involve the determination of the company's net profit.
Johnson & Johnson Company net cash flow from operating activities for 2017 was
$21,056 million while that of 2016 was $18,767 million. In 2015 the company had net cash
flows from operating activities worth $19,569 million. The net cash flow in 2017 was the result
of $1,300 million net earnings and was a sharp decrease compared to the retained earnings at the
beginning of the financial year which was $16,540 million and $15,409 in 2015. However, the
current liabilities and non-current liabilities decreased with a value of $ 8,979 million as
compared to the increase of $586 in 2016. This decrease in payable in 2017 despite the low
earnings contributed greatly to the increase in cash inflow in the company.
The company’s net cash flow used investing activities in 2017 was an outflow of $14,868
while in 2016 and 2015 were had an outflow of $4,761 and $7,735 respectively. In 2017, the
company increased its acquisitions that increased cash outflow but also decreased on the
purchase of investment which decreased cash outflow. In 2016 and 2015, the company’s
purchased more investments and made less acquisition. The company also made more sold a
FINANCIAL STATEMENTS ANALYSIS
4
large chunk of their investments in the two years compared to 2017 which increased cash inflow
in 2015 and 2016 compared to 2017.
The net cash inflow from financing activities for 2017 was an outflow of $7673 while
that of 2016 and 2015 was an outflow of $8,551 and $11,136 respectively. Proceeds from longterm debt were high in 2016 and 2017 which valued at $8,992 and $12,004 respectively
compared to 2015 which were valued at $75. The low debt proceeds reduced the inflow of cash
for the latter year compared to the former two years. For the years 2017, the cash and cash
equivalent balance was an overdraft of $1148 compared to the opening balance of $5,240.
Trend Analysis Of J&J Company’s Balance Sheet
Trend analysis on a balance sheet assists shareholders and stakeholders of a company to
assess the progress of the company by comparing the company’s assets and liabilities from
previous years. A balance sheet is a picture of a company's financial position, and therefore a
trend analysis will reveal if the company is facing financial stress or growth. The total assets of
the company increased from $141,208 to $157,303 which was an increase of 11.4 percent.
The table below shows the total assets and liabilities for 2015, 2016 and 2017. From the
table, we can see that the total assets of Johnson & Johnson Company have been increasing over
the years. The total liabilities to have been increasing from 2015 to 2017
Table 1: Assets and Liabilities of J & J Company for 2015 - 2017
Average of 2017 Average of 2016 Average of 2015
Total Assets
157,303
141,208
133,411
Total liabilities
97,143
70,790
62,261
FINANCIAL STATEMENTS ANALYSIS
5
Graph 1: Total Assets and Liabilities of Johnson & Johnson Company for the years 2015 - 2017
Total Assets and Liabilities
180,000
160,000
140,000
120,000
100,000
Average of 2017
80,000
Average of 2016
60,000
Average of 2015
40,000
20,000
Total Assets
Total liabilities
The graph presents a better view of the growth in total assets as wells as total liabilities of
the company. From the graph, we can see that the rate at which the assets increased in these three
years was slower compared to that of liabilities. However, both the graph and the tables show
that the company is in a healthy financial position.
Table 2: Assets and Liabilities of J & J Company for 2016 & 2017
Total Assets
Total Current Assets
Total current liabilities
Total Equity
Total liabilities
Total Liabilities and Shareholders' Equity
Total Shareholders' Equity
Average of 2016 Average of 2017
141,208
157,303
65,032
43,088
26,287
30,537
98,770
91,714
70,790
97,143
141,208
157,303
70,418
60,160
FINANCIAL STATEMENTS ANALYSIS
6
Graph 2: J & J Company's Assets, Liability and Equity Totals for the Years 2016 & 2017
J & J COMPANY'S ASSETS, LIABILITY AND EQUITY
TOTALS
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Average of 2016
Average of 2017
We can see from the graph above that the total equity of the company reduced during the
year 2017 compared to 2016 but all the other totals increased comparing the same period.
FINANCIAL STATEMENTS ANALYSIS
References
Fridson, M & Alvarez, F. (2011) Financial Statement Analysis: A Practitioner's Guide. 4th ED.
Wiley Finance.
Johnson & Johnson Company. (2018). Annual Report 2017. Accessed on April 11, 2018.
https://www.jnj.com/about-jnj/annual-reports
7
Running Head: FINANCIAL STATEMENTS ANALYSIS
Financial Statements Analysis – Johnson & Johnson Company
Tena Jones
Rasmussen College
April 11, 2018
1
FINANCIAL STATEMENTS ANALYSIS
2
Introduction
Johnson & Johnson Company is an American investment holding company whose
interest mainly lies in the manufacturing, research and development, and trade in a broad
assortment of products in the health sector. Its main core business revolves around production
and supply of pharmaceuticals, medical devices, and consumer goods. It is practically felt in
globally having subsidiaries in over 67 countries and its products finding their way into the
market of over 175 countries in the world. This essay will analyze the company’s financial
performance for the accounting period January 01, 2017 to December 31, 2017. We will
scrutinize, analyze and compare various financial parameters to help us understand the financial
performance of the company. Financial statements allow shareholders and stakeholders to
determine the financial health, efficiency, and profitability of a company. I will use financial
statements and statements of income contained in the 2017 annual report of Johnson & Johnson
Company.
Assets and Liabilities
In 2017, the total current assets for Johnson & Johnson Company were $43,088 million
and the total current liabilities were $30,537. The current assets decreased sharply compared to
2016 where the value was $65,032 which was attributed to the large sale of marketable securities
held by the company. Current liabilities, on the other hand, increased by $ 4,250 million from the
previous $26,278 million in 2016. The current assets were greater than the current liabilities
which show that the company was in a good position to offset its liabilities. The current ratio for
the year was 1.4 percent which was a significant drop from the previous years’ of 2.5.
FINANCIAL STATEMENTS ANALYSIS
3
Cash Flow
Cash flow statements show the movement of cash that is cash inflow and cash outflows
of a company for a certain fiscal year. It provides information about a company's receipts and
payments hence used to determine whether the company can generate positive cash flows in
future periods. It is also a measure of the company's ability to pay its short-term debts when they
fall due. The cash, in this case, constitute of cash at hand or bank and cash equivalents such as
government securities. Cash flow from operating activities is the cash that arises from
transactions that involve the determination of the company's net profit.
Johnson & Johnson Company net cash flow from operating activities for 2017 was
$21,056 million while that of 2016 was $18,767 million. In 2015 the company had net cash
flows from operating activities worth $19,569 million. The net cash flow in 2017 was the result
of $1,300 million net earnings and was a sharp decrease compared to the retained earnings at the
beginning of the financial year which was $16,540 million and $15,409 in 2015. However, the
current liabilities and non-current liabilities decreased with a value of $ 8,979 million as
compared to the increase of $586 in 2016. This decrease in payable in 2017 despite the low
earnings contributed greatly to the increase in cash inflow in the company.
The company’s net cash flow used investing activities in 2017 was an outflow of $14,868
while in 2016 and 2015 were had an outflow of $4,761 and $7,735 respectively. In 2017, the
company increased its acquisitions that increased cash outflow but also decreased on the
purchase of investment which decreased cash outflow. In 2016 and 2015, the company’s
purchased more investments and made less acquisition. The company also made more sold a
FINANCIAL STATEMENTS ANALYSIS
4
large chunk of their investments in the two years compared to 2017 which increased cash inflow
in 2015 and 2016 compared to 2017.
The net cash inflow from financing activities for 2017 was an outflow of $7673 while
that of 2016 and 2015 was an outflow of $8,551 and $11,136 respectively. Proceeds from longterm debt were high in 2016 and 2017 which valued at $8,992 and $12,004 respectively
compared to 2015 which were valued at $75. The low debt proceeds reduced the inflow of cash
for the latter year compared to the former two years. For the years 2017, the cash and cash
equivalent balance was an overdraft of $1148 compared to the opening balance of $5,240.
Trend Analysis Of J&J Company’s Balance Sheet
Trend analysis on a balance sheet assists shareholders and stakeholders of a company to
assess the progress of the company by comparing the company’s assets and liabilities from
previous years. A balance sheet is a picture of a company's financial position, and therefore a
trend analysis will reveal if the company is facing financial stress or growth. The total assets of
the company increased from $141,208 to $157,303 which was an increase of 11.4 percent.
The table below shows the total assets and liabilities for 2015, 2016 and 2017. From the
table, we can see that the total assets of Johnson & Johnson Company have been increasing over
the years. The total liabilities to have been increasing from 2015 to 2017
Table 1: Assets and Liabilities of J & J Company for 2015 - 2017
Average of 2017 Average of 2016 Average of 2015
Total Assets
157,303
141,208
133,411
Total liabilities
97,143
70,790
62,261
FINANCIAL STATEMENTS ANALYSIS
5
Graph 1: Total Assets and Liabilities of Johnson & Johnson Company for the years 2015 - 2017
Total Assets and Liabilities
180,000
160,000
140,000
120,000
100,000
Average of 2017
80,000
Average of 2016
60,000
Average of 2015
40,000
20,000
Total Assets
Total liabilities
The graph presents a better view of the growth in total assets as wells as total liabilities of
the company. From the graph, we can see that the rate at which the assets increased in these three
years was slower compared to that of liabilities. However, both the graph and the tables show
that the company is in a healthy financial position.
Table 2: Assets and Liabilities of J & J Company for 2016 & 2017
Total Assets
Total Current Assets
Total current liabilities
Total Equity
Total liabilities
Total Liabilities and Shareholders' Equity
Total Shareholders' Equity
Average of 2016 Average of 2017
141,208
157,303
65,032
43,088
26,287
30,537
98,770
91,714
70,790
97,143
141,208
157,303
70,418
60,160
FINANCIAL STATEMENTS ANALYSIS
6
Graph 2: J & J Company's Assets, Liability and Equity Totals for the Years 2016 & 2017
J & J COMPANY'S ASSETS, LIABILITY AND EQUITY
TOTALS
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Average of 2016
Average of 2017
We can see from the graph above that the total equity of the company reduced during the
year 2017 compared to 2016 but all the other totals increased comparing the same period.
FINANCIAL STATEMENTS ANALYSIS
References
Fridson, M & Alvarez, F. (2011) Financial Statement Analysis: A Practitioner's Guide. 4th ED.
Wiley Finance.
Johnson & Johnson Company. (2018). Annual Report 2017. Accessed on April 11, 2018.
https://www.jnj.com/about-jnj/annual-reports
7
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