Analyze Deere & Company

Deere & Company (DE) manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deeres credit division loans money to customers to finance the purchase of their farm and construction equipment.

The following information is available for three recent years (in millions except per-share amounts):

		Year 3		Year 2		Year 1
Net income (loss)		$1,523.9		$1,940.0		$3,161.7
Preferred dividends		$ 0.00		$ 0.00		$ 0.00
Interest expense		$ 763.7		$ 680.0		$ 664.0
Shares outstanding for computing earnings per share		315		334		363
Cash dividend per share		$ 2.40		$ 2.40		$ 2.22
Average total assets		$ 57,965		$ 59,642		$ 60,429
Average stockholders equity		$ 6,644		$ 7,912		$ 9,667
Average stock price per share		$ 92.03		$ 81.10		$ 85.58

1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place, except for per-share amounts. Round per-share amounts to two decimal places.):

			Year 3			Year 2			Year 1
a.	Return on total assets			%			%			%
b.	Return on stockholders' equity			%			%			%
c.	Earnings per share		$			$			$
d.	Dividend yield			%			%			%
e.	Price-earnings ratio

2. Based on these data, which of the following statements is correct?

1. Deeres profitability, as measured by earnings per share, has improved significantly during the three-year period.
2. The returns on total assets and total stockholders equity have also improved significantly during this period.
3. The dividend yield increased significantly in Year 3 due to a large increase in the cash dividend.
4. The price-earnings ratio has improved during this three-year period as the share price has increased at a faster pace than earnings.