Deere & Company (DE)

The liquidity ratios of Deere & Company provide insight into the company's ability to meet short-term financial obligations.

1. Current Ratio:
- The current ratio indicates the company's ability to cover its short-term liabilities with its current assets.
- Deere & Company's current ratio fluctuated over the period, from a high of 2.03 on October 31, 2024, to a low of 0.87 on October 29, 2023.
- A ratio above 1 suggests the company has more current assets than current liabilities, indicating a better ability to meet short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets.
- Deere & Company's quick ratio ranged from 0.17 on October 31, 2022, to 0.63 on October 27, 2024.
- A ratio above 1 is typically preferred, as it indicates the company can cover its short-term obligations without relying on selling inventory.

3. Cash Ratio:
- The cash ratio focuses solely on the most liquid assets, cash and cash equivalents, providing the strictest measure of liquidity.
- Deere & Company's cash ratio remained relatively stable over the period, ranging from 0.17 on October 31, 2022, to 0.63 on October 27, 2024.
- A higher cash ratio implies a stronger ability to cover short-term liabilities without relying on other current assets.

In summary, Deere & Company's liquidity ratios show variability over time, with fluctuations in its ability to cover short-term obligations. While the current ratio improved towards the end of the period, the quick and cash ratios stayed relatively consistent, indicating a need for the company to manage its short-term liquidity effectively.

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Additional liquidity measure

The cash conversion cycle of Deere & Company has exhibited some fluctuations over the years. On October 31, 2022, the company's cash conversion cycle was 87.22 days, indicating that it took this amount of time for Deere & Company to convert its investments in inventory and other resources into cash. However, there was a significant increase in the cash conversion cycle to 575.54 days on October 29, 2023. This prolonged cycle suggests potential inefficiencies in managing working capital and converting inventory into sales.

On October 31, 2023, there was a notable improvement in the cash conversion cycle, dropping to 78.50 days, which is a positive sign of faster conversion of assets into cash. Subsequently, on October 27, 2024, the cycle increased again to 449.94 days, signaling a potential slowdown in the company's cash conversion process. However, by October 31, 2024, the cycle improved to 84.70 days, aligning more closely with the earlier positive trend shown.

Overall, fluctuations in the cash conversion cycle of Deere & Company suggest varying efficiency levels in managing cash flow and working capital. It is essential for the company to focus on continuously optimizing its operational processes to maintain a healthy cash conversion cycle and ensure efficient utilization of resources.