Case 3: Deere & Company

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.)

Aggregate Contractual Obligations The payment schedule for the company's contractual obligations at year-end in millions of dollars is as follows:
		Total		Less than 1 year		13 years		4 and 5 years		More than 5 years
Debt
Equipment operations		$5,091		$434		$270		$775		$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		609		1,069		745		2,354
Accounts payable		2,743		2,611		90		39		3
Capital leases		87		39		42		4		2
Purchasing obligations		3,007		2,970		37
Operating leases		371		121		134		70		46
Total		$ 47,768		$ 16,746		$13,119		$ 8,211		$ 9,692

Instructions

a.

Compute Deere & Companys 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.