FREE Trial

Deere & Company is a global manufacturer and distributor of agricultural, construction, and forestry equipment. It reported

Question:

Deere & Company is a global manufacturer and distributor of agricultural, construction, and forestry equipment. It reported the following information in its 2009 annual report.

image

Instructions(a) Compute Deere's inventory turnover ratio and days in inventory for 2009.(b) Compute Deere's current ratio using the 2009 data as presented, and then again after adjusting for the LIFO reserve.(c) Comment on how ignoring the LIFO reserve might affect your evaluation of Deere'sliquidity.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally.    Inventory Turnover Ratio FormulaWhere,...
Transcribed Image Text:

(in millions) 2009 2008 Inventories (LIFO) $ 2,397 30,857 12,753 1,367 16,255 3,042 Current assets Current liabilities LIFO reserve Cost of goods sold

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 71% (14 reviews)

a b Based on data presented Current ratio 30857 12753 242 1 After adjusting for LIFO r...View the full answer


answer-question-section
Answered By
tutor-profile-image
Mehwish Aziz
What I have learnt in my 8 years experience of tutoring is that you really need to have a friendly relationship with your students so they can come to you with their queries without any hesitation. I am quite hardworking and I have strong work ethics. Since I had never been one of those who always top in the class and always get A* no matter what, I can understand the fear of failure and can relate with my students at so many levels. I had always been one of those who had to work really hard to get decent grades. I am forever grateful to some of the amazing teachers that I have had who made learning one, and owing to whom I was able to get some extraordinary grades and get into one of the most prestigious universities of the country. Inspired by those same teachers, I am to be like one of them - who never gives up on her students and always believe in them!
5.00+ 3+ Reviews 10+ Question Solved
Related Book For  book-img-for-question
Financial Accounting Tools for business decision making

Financial Accounting Tools for business decision making

ISBN: 978-0470534779

6th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

See More Books
Question Posted:
See More Questions

Related Video

Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.

Students also viewed these Managerial Accounting questions

ELearning In Medical Physics And Engineering Building Educational Modules With Moodle 1st Edition - ISBN: 1138347329 - Free Book