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Financial Statement Analysis Case 2: Profitability Analysis of Johnson & Johnson and Pfizer Inc. Pfizer Inc. is a U.S. products that are similar to those sold b Johnson's profitability ratios computed in Example 5B.1 in the chapter appendix. Use these an of Pfizer's income statements to answer the following questions: are similar to those sold by Johnson& Johnson. In the following, we present Johnson & d the excerpts company that manufactures and distributes pharmaceutical and consumer healthcare a. If Johnson & Johnson's sales are $71,890 million in 2016, which company is larger using sales as a measure of size? b. Compute Pfizer's profit margin in 2016 and 2015. c. Compute Pfizer's return on assets in 2016 and 2015. d. Compute Pfizer's return on equity in 2016 and 201:5. e. Compare Johnson& Johnson's and Pfizer's profit margins in 2016 and 2015. f. Compare Johnson & Johnson's and Pfizer's return on assets in 2016 and 2015. g. Compare Johnson&Johnson's and Pfizer's return on equity in 2016 and 2015. Pfizer Inc. (all dollars in millions) Balance Sheets (excerpts) End of Year Total assets Total stockholders' equity Statement of Earnings (excerpts) For the year Sales to customers Net earnings 2014 2015 $167,381 $64,720 2015 2016 $171,615 $ $167,566 S 59,544 2016 71,301 2014 $49,605 $9,135 $52,824 $48,851 $7,215 $6,960 Johnson & Johnson (from Example 5B.1 in Appendix B) 2016 23.0% 12.0% 23.6% Profitability Measure Profit Margin Return on Assets Return on Equity 2015 22.0% 11.7% 21.9% Sources: Johnson& Johnson and Pfizer income statement Surfing the Standards Cases Surfing the Standards Case 1: Interest Allocation to Discontinued Operations Kimbro Concrete Companies is disposing of its blacktop segment this year and is reporting it as a discon-

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