Research publicly traded companies and select two companies in different sectors. Compare the capital structure for each and explain your conclusions on the similarities and differences. What support can you provide for why each company adheres to their chosen structuring mechanisms?
Two companies I choose to compare that are different sectors are Meta Platforms and Johnson $ Johnson. Meta is a part of the technology sectors of today’s market, whereas Johnson & Johnson is part of the Healthcare. When comparing the capital structure, it is essential to look at factors such as debt-to-equity ratios because this is how a company finances its operations and growth (Johnson & Johnson Share Holder Equity 2010-2022: JNJ., 2023). Johnson & Johnson had a debt-to-equity ratio of 0.57 in 2017 and 0.46 in 2021. Meta had a debt-to-equity ratio of 0.14 and in 2021, it was 0.33. Meta platform’s revenue for 2022 has a decline of 1.12 percent year-over compared to the 1.25% increase that Johnson & Johnson had (Meta Platforms Share Holder Equity 2010-2022: Meta., 2023). In 2022 Johnson and Johnson had a decline in their total year-over-year assets of 2.29%, whereas Meta had 11.89 percent increase. Meta also has an increase in their total liabilities to 45.99% year-over-year. Meta Platform has a decline of 7.74% in total liabilities. Johnson & Johnson has an increase of 6.16% in shareholder equity, whereas Meta only increased 0.67%. (Johnson & Johnson Share Holder Equity 2010-2022: JNJ., 2023). One of the reasons the healthcare sector has had an increase over in the last few years is because of the pandemic. The technology sector has seen a significant amount of growth and is one of the most attractive investors out there.
Johnson & Johnson Share Holder Equity 2010-2022: JNJ. (2023). Macrotrends https://www.macrotrends.net/stocks/charts/JNJ/john…
Meta Platforms Share Holder Equity 2010-2022: Meta. (2023). Macrotrends. https://www.macrotrends.net/stocks/charts/META/met…
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