Deere & Company is a global manufacturer and distributor of agricultural, con- Determine the effect of the struction, and forestry equipment. It reported the following information in its 1998 an- LIFO reserve on current nual report:

Instructions

(a) Compute Deere’s current ratio using the 1998 data as presented, and then again after adjusting for the LIFO reserve.

(b) Comment on how ignoring the LIFO reserve might affect your evaluation of Deere’s liquidity.

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(in millions) Inventories (LIFO) Current assets Current liabilities LIFO reserve 1998 $ 1,287 14,638 8,763 1,050