The story of one of the greatest multinational corporations, Johnson & Johnson, begins in the 1880s, when Robert Wood Johnson heard the idea of known English surgeon to develop a treatment to kill the airborne germs in the hospital room by sterilizing

Asset turnover is the third measure of financial performance which can reflect the actual situation in the company operation. This ratio is the amount of sales generated for each dollar of company assets and thus the higher this ratio the better is the company ability to create revenues from its' assets, thus the usage of the assets is efficient. This ratio also reveals the company pricing strategy, where the companies with higher profit margins tend to have lower asset turnover, thus they are able to keep more in earnings out of each dollar of sales with lower sales generated relevant to the assets they possess. Companies with low profit margins tend to have high asset turnover. This is relevant for J&J company, where the lower profit margin ratio comparing with Eli Lilly (12,7% compared to 19,3%) is offset by higher asset turnover, where it is 112,4% for J&J and only 46,8% for Eli Lilly company. So, the J&J is able to generate more sales than the other company due to its' better R&D and better pricing strategy which is reflected in lower margins and thus the company products are more competitive which allows higher sales volumes. It can be subjectively stated that Eli Lilly company is using its' assets twice as more efficient in terms of generating sales, but also profit margins must be compared and it is higher for Eli Lilly company. Also, the higher is the asset turnover for intangible assets of the company, the more efficient is the company ability to generate sales volumes and profit by using its' employee capital power and goodwill.

Debt ratio is the coefficient reflecting the total company assets divided by total company liability and thus may reflect which fund sources the company is using. There is optimal debt to equity ratio for each company as the cost of debt is usually lower than cost of equity and also debt payments reduce taxable income. On the other hand, high leverage may have negative signals to investors. High debt to equity ratio may imply that the net worth of the company assets is either too low or company liabilities are too high. The ways to solve this problem may be to add capital by selling off stocks which can also have negative effect by signaling to investors that the top management of the company believes that the corporate assets are overpriced and the market may react by decreasing company stock prices. Another solution is to slow growth by allowing profits to reduce liabilities instead of purchasing more assets. Eli Lilly company has the debt to equity ratio of 31,2% meaning that this is the amount of borrowed funds in the total company value. J&J has managed to grow and perform profitably by maintaining rather low debt to equity ratio of 13,6%. It is impossible to draw reliable conclusions without further analysis of debt policy for each company as if the cost of equity for J&J is much higher than of debt, the fact that the debt ratio is lower for this company than for Eli Lilly may mean that the J&J is not using credit opportunities effectiv

Some common words found in the essay are:
Eli Lilly, , Wood Johnson, Mister Johnson, eli lilly, Johnson Johnson, profit margin, eli lilly company, lilly company, debt equity, profit margins, debt equity ratio, net profit, equity ratio, asset turnover, turnover ratio, net profit margin, credit policy, analysis ratios include, receivable turnover ratio,
Approximate Word count = 2033
Approximate Pages = 8 (250 words per page double spaced)