Deere & Company (DE)

Short-term

Turnover ratios

The activity ratios of Deere & Co. provide insight into how efficiently the company is managing its assets and operating cycle.

The inventory turnover has shown a slight improvement from 4.19 in 2022 to 4.65 in 2023, indicating that the company is selling its inventory at a faster rate. This suggests effective inventory management and the ability to convert inventory into sales.

The receivables turnover has remained relatively consistent over the years, indicating that the company is able to collect on its credit sales effectively. A higher receivables turnover ratio signifies a shorter time to collect outstanding payments, which is positive for the company's cash flow.

The payables turnover has also seen an increase from 9.13 in 2022 to 10.94 in 2023, indicating that the company is paying off its suppliers more efficiently. This may reflect improved vendor management and the ability to take advantage of credit terms, ultimately benefiting the company's working capital.

The working capital turnover has shown a significant increase from 7.23 in 2022 to 9.91 in 2023, indicating that the company is generating more revenue for each dollar of working capital. This suggests improved efficiency in utilizing its current assets and liabilities to support sales growth.

Overall, the activity ratios of Deere & Co. reflect efficient management of inventory, receivables, payables, and working capital, which bodes well for its operating performance and financial health.

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Average number of days

Days of inventory on hand (DOH) measures the average number of days it takes for Deere & Co. to sell its inventory. Over the past five years, the trend has been fluctuating, with a decrease from 87.22 days in 2022 to 78.50 days in 2023. This indicates that the company has been more efficient in managing its inventory turnover in recent years.

Days of sales outstanding (DSO) reflects the average number of days it takes for Deere & Co. to collect payment after making a sale. The consistent DSO of 62.13 days in 2023 and 2022 suggests that the company has maintained stable receivables management over the past two years.

The number of days of payables indicates the average number of days Deere & Co. takes to pay its suppliers. This ratio decreased from 39.98 days in 2022 to 33.35 days in 2023, which shows that the company has been able to prolong its payment period.

Overall, the activity ratios suggest that Deere & Co. has made improvements in managing its inventory, maintaining stable collection of receivables, and increasing its payables period, which ultimately indicates efficient management of its working capital.

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Long-term

The long-term activity ratios of Deere & Co. indicate the efficiency with which the company utilizes its fixed assets and total assets to generate sales. The fixed asset turnover ratio has shown a consistent improvement over the past five years, increasing from 2.90 in 2019 to 4.44 in 2023. This indicates that the company has been able to generate greater sales in relation to its investment in fixed assets, suggesting improved efficiency in utilizing its long-term assets to drive revenue.

Similarly, the total asset turnover ratio has also shown a positive trend, rising from 0.54 in 2019 to 0.59 in 2023. This indicates that Deere & Co. has been able to generate more revenue relative to its total assets over the years, which is a positive signal of overall asset utilization efficiency.

The improvement in both ratios suggests that the company has been effectively managing and utilizing its long-term assets to generate sales, which is essential for sustainable growth and profitability. This trend reflects positively on the management's ability to optimize the utilization of both fixed and total assets, ultimately contributing to the company's financial performance.