Two drivers stand out. First, selling, general and administrative (SG&A) and other operating expenses were higher in absolute terms in 2024 (SG&A reported at $6.33B) even though revenue was essentially flat. Second, working capital changed sharply: the cash flow statement records a change in working capital of -$571MM in 2024, compared with a positive $797MM in 2023, subtracting from operating cash flow and pressuring free cash flow.

These margin and cash drivers are visible in the company’s two most relevant cash metrics. Net cash provided by operating activities fell to $1.77B in 2024 from $3.17B in 2023 (-44.2%), and free cash flow slid to $1.33B (-50.7%), after capital expenditure of $434MM. That combination—lower EBITDA and weaker cash conversion—reduces the cushion available to cover dividends, repurchases or litigation costs.

Table 1 below summarizes the headline income statement and margin changes for FY2024 vs FY2023.

Income statement (USD)	FY2024	FY2023	YoY change
Revenue	$15.46B	$15.44B	+0.13%
Gross profit	$8.96B	$8.64B	+3.70%
Operating income	$1.84B	$2.51B	-26.67%
EBITDA	$2.47B	$3.17B	-22.07%
Net income	$1.03B	$1.66B	-38.00%
Net margin	6.66%	10.77%	-4.11pp
Operating margin	11.91%	16.27%	-4.36pp

(Company figures from FY2024 Form 10‑K filed 2025‑02‑24.)

Balance sheet and liquidity: heavier intangibles, rising net debt, sub‑1 current ratio#

Kenvue’s balance sheet is characterized by large intangible assets and modest near‑term liquidity. At year‑end 2024 total assets were $25.60B with goodwill and intangible assets of $17.32B, leaving tangible asset coverage low relative to liabilities. Total liabilities were $15.93B, producing shareholders’ equity of $9.67B.

Liquidity metrics are notable. Cash and cash equivalents were $1.07B at year‑end 2024 and total current assets were $5.53B versus total current liabilities of $5.74B, giving a calculated current ratio of approximately 0.96x (slightly below the TTM ratio disclosed). Net debt—total debt less cash—was $7.65B, up from $7.04B at the end of 2023. Using FY2024 EBITDA of $2.47B yields a net debt to EBITDA of roughly 3.10x at year‑end; that is above the dataset’s listed TTM metric of 2.53x, which likely reflects timing differences between a trailing‑twelve‑month EBITDA calculation and the 12/31/2024 balance sheet snapshot.

There are a few data items that require caution: the 2023 cashflow line shows dividends paid of -$14.55B, a large, atypical number inconsistent with reported annual dividend per share and likely reflecting separation/spin‑related transfers or classification differences in the year of the IPO and corporate separation. Investors should therefore prioritize the operational cash flow and the 2024 recurring dividend payments ($1.55B of dividends paid in 2024) when assessing dividend sustainability.

Table 2 provides a compact balance sheet/cash flow snapshot and key calculated ratios.

Balance sheet & cash flow (USD)	FY2024	FY2023
Cash & cash equivalents	$1.07B	$1.38B
Total assets	$25.60B	$27.85B
Total liabilities	$15.93B	$16.64B
Total stockholders' equity	$9.67B	$11.21B
Total debt	$8.72B	$8.43B
Net debt	$7.65B	$7.04B
Net cash from operations	$1.77B	$3.17B
Free cash flow	$1.33B	$2.70B
Dividends paid	$1.55B	(see note)
Calculated current ratio	0.96x	1.12x
Net debt / EBITDA (calc.)	~3.10x	~2.22x

(Company figures from FY2024 Form 10‑K filed 2025‑02‑24. Note: 2023 dividends include nonrecurring separation/transaction items; treat 2023 dividend line as anomalous for recurring payout analysis.)

Capital allocation: dividend remains, buybacks modest, but payout exceeds earnings#

Kenvue maintained a full‑year dividend of $0.8225 per share in 2024, delivering a reported dividend yield of ~4.49% on the current share price. Using FY2024 EPS of $0.75, the per‑share payout computes to roughly 109.7% of earnings (0.8225 / 0.75). The dataset reports a payout ratio near 110.8%, consistent with a payout that exceeds reported net income on a per‑share basis. In cash terms, dividends paid during 2024 totaled $1.55B, and the company repurchased $235MM of stock.

A payout above 100% is a structural red flag when persistent, but context matters. The company continues to generate significant operating cash flow on a trailing basis and retains flexibility in capital allocation levers; however, with free cash flow down sharply and net debt higher, the sustainability of dividends at the current level merits monitoring. Management historically voices a commitment to returning capital, but the interplay of litigation risk (see below), tighter liquidity metrics and lower cash generation raises the probability that future dividends or buybacks could be adjusted if cash flow does not recover.

Litigation and reputational risk: Tylenol/acetaminophen disclosures remain material#

Kenvue’s public filings explicitly disclose exposure to product liability claims connected to acetaminophen‑containing products. The company’s 2023/2024 risk disclosures and the blog materials provided highlight that plaintiffs have alleged in utero exposure harms tied to acetaminophen and named sellers of such products, including the Kenvue subsidiary that previously operated under the Johnson & Johnson Consumer umbrella.

From an investor perspective this is not hypothetical: the company’s own risk language describes the potential for projected product liability accruals encompassing thousands of claims worldwide. Unlike ordinary operational risks, large‑scale product liability outcomes can generate multi‑year cash requirements and legacy reputational damage that depresses brand equity. Given Tylenol’s position as a leading global analgesic brand and the company’s heavy exposure to intangible brand value (goodwill and intangible assets of $17.32B), any sustained erosion in demand or large settlements would have outsized implications for cash flow and valuation.

It is important to emphasize that scientific consensus remains contested and regulators had not (in the immediate reporting window) issued a sweeping directive against acetaminophen use in pregnancy. Nonetheless, litigation outcomes and regulatory pronouncements are binary catalysts that could force material expense recognition or labeling changes, and they are explicitly called out in Kenvue’s filings. Investors should therefore track: (1) major court rulings or consolidated case settlements, (2) any regulatory labeling guidance from agencies such as the FDA or HHS, and (3) company disclosures about accruals or contingent liabilities.

Near‑term earnings behavior and analyst estimates#

Quarterly reported EPS outcomes in 2025 show small beats relative to estimates, pointing to continued operational resilience in the consumer health base business. For example, the most recent reported quarter (2025‑08‑07) showed EPS of $0.29 vs an estimate of $0.2817, a modest beat. Consensus forward estimates embedded in the data indicate gradual earnings improvement: analysts model revenue CAGR of ~2.98% into the mid‑to‑late 2020s and an EPS CAGR of ~6.67%. Forward multiples compress slightly over the forecast window—forward PE moves from 18.48x (2025) to 13.55x (2029) in the dataset—reflecting expected earnings growth and modest EV/EBITDA improvement.

These estimates assume resolution or manageable outcomes for litigation and steady market share retention for core brands. They also assume margin recovery through cost control and modest top‑line growth. Deviations from those assumptions—particularly larger litigation costs or structural brand damage—would materially change outcomes.

Where the numbers and strategy intersect: what to watch next#

First, margins. The company’s operating margin fell 4.36 percentage points year‑over‑year in 2024 despite stable revenues. Investors should watch sequential SG&A trends, gross margin stability and any announced cost‑takeout programs. Margin recovery will be required to restore pre‑2024 profitability levels absent outsized revenue growth.

Second, cash conversion and liquidity. With free cash flow down roughly 50.7%, the company’s ability to fund the dividend and share repurchases without increasing leverage will depend on (a) restoration of working capital inflows, (b) EBITDA recovery, or (c) reductions in dividend/buyback activity. The current ratio under 1.0 and net debt of $7.65B increase the sensitivity to cash shocks.

Third, litigation/regulatory outcomes and reputational metrics. Because Tylenol represents an outsized portion of Kenvue’s brand value, any sustained negative developments in litigation or regulatory guidance could reprice future revenue risk. Watch for formal regulatory statements, consolidated case dispositions, and any material accruals disclosed in 8‑K/10‑Q/10‑K filings.

Finally, capital allocation signals. Management’s willingness to sustain a payout above reported earnings indicates a prioritization of shareholder distributions. Future changes—either a cut to the dividend or an increase in buybacks—would send a strong signal about management’s assessment of cash durability and the severity of legal exposures.

Key takeaways and headline metrics#

Kenvue’s FY2024 performance offers a mixed picture: flat revenue (+0.13%) shows demand resilience in core consumer health categories, but profitability and cash flow fell sharply—net income -38.0% and free cash flow -50.7%—creating tension with the company’s $0.8225 annual dividend that represents roughly 110% of FY2024 EPS on a per‑share basis. Balance sheet composition—large intangibles (goodwill and intangible assets of $17.32B), rising net debt ($7.65B) and a current ratio under 1.0—adds to the sensitivity to adverse events.

Analyst models in the data assume gradual recovery in margins and modest revenue growth (revenue CAGR ~2.98%, EPS CAGR ~6.67%), but those models are conditional on contained litigation costs and preserved brand equity. Forward multiples in the dataset point to earnings improvement as the mechanism to lower the headline valuation multiples.

What this means for investors#

Kenvue’s business remains large, diversified and anchored by powerful global brands. The revenue base demonstrated resilience in FY2024, and quarterly results through 2025 show the company still executing core consumer health operations with modest beats. However, the immediate priorities for investors are clarity and optionality: clarity around litigation and regulatory exposure, and optionality in capital allocation should cash flow remain pressured. The critical inflection points likely to move the investment thesis are (1) any material accruals or settlement disclosures tied to product liability claims, (2) regulatory labeling or guidance changes from major agencies, and (3) signs of sustainable margin recovery driven by cost actions or favorable mix.

If management restores operating leverage and cash conversion, the company can maintain dividend policy and opportunistically repurchase shares. If litigation costs or consumer demand erosion becomes material, the company will face tough tradeoffs between litigation funding, dividend maintenance and balance‑sheet flexibility. Investors should prioritize primary filings (10‑Qs, 8‑Ks, 10‑K), regulatory announcements, and quarterly cash flow trends rather than short‑term headlines.

Monitoring checklist (data triggers to watch in the next 12 months)#

Watch for sequential improvements in operating margin and free cash flow, explicit accruals or reserve increases tied to product liability, any regulatory labeling guidance from U.S. or European authorities, and management commentary on the dividend policy in quarterly calls. Absent those positive signals, the payout ratio above 100% on FY2024 earnings and the 2024 cash‑flow decline increase the probability that management will need to recalibrate capital allocation to preserve balance‑sheet flexibility.

Conclusion#

Kenvue remains a large consumer‑health company with deep brand assets and a stable revenue base. Yet FY2024 highlighted a vulnerability: revenue stability coupled with falling profitability and cash conversion, at a time when litigation and reputational risk connected to acetaminophen‑related claims remain an overhang disclosed in company filings. The combination of a payout that exceeds reported earnings, rising net debt, and a current ratio below 1.0 creates a clear set of near‑term priorities for management and for investors evaluating the stock. The path to restored confidence runs through margin recovery, improved cash conversion and clarity on legal/regulatory exposures. Until those data points arrive, the company’s capital allocation choices—dividends and buybacks versus liquidity preservation—will be the most important signal investors receive.

(Company financials referenced throughout are from Kenvue’s FY2024 Form 10‑K, filed 2025‑02‑24. Quarterly earnings and quarterly EPS surprises are taken from company releases in 2025.)