Question
Case 3: Deere & Company Presented below is the SEC-mandated disclosure of contractual obligations provided by Deere & Company in a recent annual report. Deere
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.
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