Interpreting the Consolidated Statements of Cash Flows of Johnson & Johnson
In the Consolidated Statements of Cash Flows of Johnson & Johnson, the net earnings for 2007 show a difference of $477 million from the previous year. Its net cash flows from operating activities exhibit a positive mark than that of the previous year, which is $15.249 million as against $14.248 million. Since net cash flows signify a measure of a company’s financial health, this 2007 result is then considered better than the previous year in terms of operating activities. Meanwhile, net cash used by investing activities shows improvement in 2007 than the previous year, but in losses however, indicated by a loss of $6.139 million in 2007 as against a loss of $20.291 million in 2006. The 2005 nest cash used by investing activities was however better than that of 2007, marking a loss of only $279 million as compared to 2007. The 2006 result as per this category exhibits the highest loss among the three annual reports, indicating a good recovery in 2007.
The net cash flows from financing activities of John a& Johnson show $5.698 million in 2007 from $6.109 million in 2006. Its proceeds from short term debt have likewise increased from $6.385 million in the previous year to $19.626 million in 2007. Likewise, proceeds from long term debts have increased tremendously.
If to compare the cash flows among operating activities, investing activities, and financing activities, one will arrive at a conclusion that the cash flows from operations is the one that delivered the most positive outcome among the three, since the other two exhibited a net cash that are actually losses. The positive thing about them, however, is that they are better than the current year, such as a drop in losses in 2007 of net cash used by investing activities by $14.152 million from 2006 and a drop of $ .411 million in losses of net cash used by financing activities in 2007.