IntroductionThe following report analyzes Johnson and Johnson from a third party perspective. The report will begin with an overview of operations followed by an assessment of the company; its financial performance, capital structure and dividend policy. Furthermore, we aim to provide advice to potential investors based on relevant financial theories to determine whether or not it is a good company to invest in. Overview of Johnson and Johnson As an American multinational corporation, Johnson & Johnson (J&J) is a manufacturer dealing with pharmaceuticals, medical devices, and consumer packaged goods. These products have since become household names and have enjoyed consumer trust globally. Founded in 1886 and incorporated in 1887, the company had a good track record from the time it was still a private company until it began going public. Although J&J is headquartered in New Jersey, the multinational company has 250 subsidiaries operating in 57 countries globally. The market reach of the organization is also vast. J&J products are sold in more than 175 countries worldwide. The large number of employees (128,100 in 2013) has allowed the company to achieve great goals in its activities. In 2013, the company's total revenue was $71.312 billion with operating profit of $15.471 billion. J&J has been one of the best investments for people since 1944, when the company listed its stock on the New York Stock Exchange. The company can boast consecutive dividend increases for the past 51 years and adjusted earnings increases for 30 consecutive years. Compared to other Fortune 500 companies, J&J has been able to generate a total return on investment of 8.9% over the past decade, while business structure is expected to increase. Although J&J has had a stagnant debt-to-equity ratio over the past two years, an upward trend is visible (see appendix). Nature of the Industry The pharmaceutical sector is also located in a highly cyclical sector. Governments around the world are cutting healthcare spending to boost public budgets, and so companies like Johnson & Johnson cannot afford to take on excessive debt in the face of an inevitable downturn in sales and profits in the economy. Management attitudes Different management attitudes determine variable capital structures. Management is conservative or aggressive depending on their view of risk. Both management styles exercise different judgments. In the case of Johnson & Johnson, management is conservative and uses less debt, while management with an aggressive approach is more likely to use debt to increase profits.