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):

Line Item DescriptionYear 3Year 2Year 1Net income (loss)$3,253$2,368$2,159Preferred dividends$0.00$0.00$0.00Interest expense$1,466$1,204$899Shares outstanding for computing earnings per share317323320Cash dividend per share$2.98$2.50$2.39Average total assets$71,560$67,947$61,852Average stockholders equity$11,354$10,426$8,046Average stock price per share$158.92$138.38$111.10

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.):

Line Item DescriptionYear 3Year 2Year 1 a. Return on total assetsfill in the blank 1%fill in the blank 2%fill in the blank 3% b. Return on stockholders' equityfill in the blank 4%fill in the blank 5%fill in the blank 6% c. Earnings per share$fill in the blank 7 $fill in the blank 8 $fill in the blank 9 d. Dividend yieldfill in the blank 10%fill in the blank 11%fill in the blank 12% e. Price-earnings ratiofill in the blank 13 fill in the blank 14 fill in the blank 15

2. Based on these data, which of the following statements is correct? 1. Deeres profitability, as measured by earnings per share, has declined significantly during the three-year period presented. 2. The returns on total assets and total stockholders equity have also declined 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 remained relatively stable, indicating that market participants view Deeres future prospects favorably.

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