Roughly how many times has JnJ sold its inventory in FY2022? Calculate inventory turnover ratio for FY2022; if conventional inventory management is not meaningful for the company then state that and explain why.
To calculate the inventory turnover ratio for Johnson & Johnson (JNJ) in FY2022:
Formula:
inventory_turnover_ratio = cost_of_goods_sold / average_inventory
Step 1: Find Cost of Goods Sold (COGS) for FY2022:
COGS (FY2022) = $31,089 million
Step 2: Find Average Inventory for FY2022:
- Inventory at start of FY2022 (Jan 2, 2022): $10,387 million
- Inventory at end of FY2022 (Jan 1, 2023): $12,483 million
- Average Inventory = (10,387 + 12,483) / 2 = $11,435 million
Step 3: Calculate Inventory Turnover Ratio:
inventory_turnover_ratio = 31,089 / 11,435 ≈ 2.72
| Metric | FY 2022 |
|---|---|
| Cost of Goods Sold ($USD Millions) | $31,089 |
| Inventory, Start of Year ($USD Millions) | $10,387 |
| Inventory, End of Year ($USD Millions) | $12,483 |
| Average Inventory ($USD Millions) | $11,435 |
| Inventory Turnover Ratio (times) | 2.72 |
Conclusion:
Johnson & Johnson turned its inventory over approximately 2.72 times in FY2022. Conventional inventory management analysis is meaningful for JNJ, as it holds significant inventory and operates in manufacturing and distribution of healthcare products, where inventory turnover is a relevant efficiency metric.