How do we calculate the Dividend Threshold and Loan Repayment Threshold of a company where if over it may cause stress on its finance? — Johnson & Johnson Case Study
Subject:
How do we calculate the Dividend Threshold and Loan Repayment Threshold of a company where if over it may cause stress on its finance? — Johnson & Johnson Case Study
.
(A)
DPS (THRESHOLD)
= DPScicc
.
Loan Repayment Per Share (THRESHOLD)
= LRepayPScicc
.
(B)
DPScicc
= 1 ÷ (1 + D/E) × EPS × CICC/NetROIC
.
LRepayPScicc
= D/E ÷ (1 + D/E) × EPS × CICC/NetROIC
.
(C)
:: CASE STUDY ::
Johnson & Johnson
Fin.Gaap.2026.Mar.TTM
.
D/E
= (17.46+37.53)÷81.19
= 0.6773001601
.
CICC
= 100×(1.0501×(1+0.6773001601×(1+2×0.0501))÷(1+0.6773001601)-1)
= 9.2588242765
.
NetROIC
= 100×21.04÷(17.46+37.53+81.19)
= 15.4501395212
.
EPS Gaap
= 21.04÷2.45
= USD 8.587755102
.
(CI)
DPS (THRESHOLD)
= DPScicc
= 1 ÷ (1 + D/E) × EPS × CICC/NetROIC
= 1 ÷ (1 + 0.6773001601) × 8.587755102 × 9.2588242765/15.4501395212
= USD 3.0682609919
.
Dividend Payout (of DPScicc)
= 100 × DPScicc/EPS
= 100 × 3.0682609919/8.587755102
= 35.728324288 %
.
Loan Repayment Per Share (THRESHOLD)
= LRepayPScicc
= D/E ÷ (1 + D/E) × EPS × CICC/NetROIC
= 0.6773001601 ÷ (1 + 0.6773001601) × 8.587755102 × 9.2588242765/15.4501395212
= USD 2.078133661
.
The coming quarterly dividend payment is USD 1.34.
Quarterly DPScicc (THRESHOLD) is USD 3.0682609919 ÷ 4 = USD 0.767065248.
.
Johnson & Johnson has overpaid dividends by :
100×(1.34÷USD 0.767065248-1)
= 74.6917884096 %
.
Dividends Overpayment may stress the company financial condition.