Presented below is the SEC-mandated disclosure of contractual obligations provided by Deere & Company in a recent
Question:
Presented below is the SEC-mandated disclosure of contractual obligations provided by Deere & Company in a recent annual report. Deere & Company reported current assets of $50,060 and total current liabilities of $21,394 at year-end. (All dollars are in millions.)
Instructions
a. Compute Deere & Company?s working capital and current ratio (current assets ? current liabilities) with and without the off -balance-sheet contractual obligations reported in the schedule.
b. Briefly discuss how the information provided in the contractual obligation disclosure would be useful in evaluating Deere & Company for loans (1) due in one year and (2) due in five years.
Less than 1-3 4 and 5 More than 5 years 1 year Total years years Debt $ 5,091 $ 434 $ 270 $ 775 Equipment operations $3,612 Financial services 31,692 9,962 11,477 6,578 3,675 Total 36,783 10,396 11,747 7,353 7,287 Interest on debt 4,777 1,069 745 2,354 609 Accounts payable Capital leases Purchasing obligations Operating leases 2,743 2,611 90 39 3 87 39 4. 42 3,007 2,970 37 371 121 134 70 46 Total $47,768 $16,746 $13,119 $8,211 $9,692
Step by Step Answer:
a Working Capital Current Ratio Without Contractual Obligations Working Capital Current Ratio 50060 ...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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