Question
Profitability analysis Deere & Company manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deer's
Profitability analysis Deere & Company manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deer's 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): Net income; Year 3 $2368.4 Year 2 $2159.1 Year 1 $1523.9 Preferred dividends Year 3 $0.00 Year 2 $0.00 Year 1 $0.00 Interest expense Year 3 $1203.6 Year 2 $899.5 Year 1 $763.7 Shares outstanding for computing earnings per share Year 3 323 Year 2 320 Year 1 315 Cash divided per share Year 3 $2.58 Year 2 $2.40 Year 1 $ 2.40 Average total assets Year 3 $67,947 Year 2 $61,852 Year 1 $57,933 Average stockholders' equity Year 3 $10,426 Year 2 $8,046 Year 1 $6,644 Average stock price per share Year 3 $134.16 Year 2 $110.59 Year 1 $83.94 Compute the following ratios for each year, rounding ratios and percentages to one decimal place, except for per share amounts: a. Return on total assets b. Return on stockholders' equity c. Earnings per share d. Dividend yield e. Price-earnings ratio Two. Based on these data, evaluate Deer's profitability.
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