Deere & Company (DE)

The liquidity ratios of Deere & Co. over the past five years indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has shown a decreasing trend from 1.16 in 2021 to 1.09 in 2023. This suggests a potential deterioration in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has remained relatively stable around 0.24 over the past three years. This indicates that the company may have limited ability to cover its short-term obligations with its most liquid assets.

The cash ratio, which measures the proportion of cash and cash equivalents to current liabilities, has fluctuated over the years, exhibiting a peak of 0.15 in 2021, but has decreased to 0.10 in 2023. This implies that the company's cash reserves may be insufficient to cover its current liabilities.

Overall, the liquidity ratios suggest that Deere & Co. may face challenges in meeting its short-term obligations, and management should closely monitor and address any potential liquidity constraints.

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Additional liquidity measure

The cash conversion cycle of Deere & Co. has exhibited fluctuations over the past five years. In the most recent fiscal year ending on October 29, 2023, the company's cash conversion cycle stood at 107.28 days, showing a slight decrease from the prior year. This indicates that, on average, it took Deere & Co. approximately 107.28 days to convert its investments in inventory into cash receipts from customers.

The trend in the cash conversion cycle suggests that the company has been moderately effective in managing its working capital and converting its resources into cash flow. A lower cash conversion cycle generally indicates that the company is efficiently managing its cash flow and working capital, thus potentially leading to improved liquidity and financial performance.

However, while the recent reduction in the cash conversion cycle is a positive indicator, it would be beneficial for the company to continue monitoring and optimizing its working capital management to ensure sustained efficiency in converting inventory into cash. This can help mitigate the risk of inventory obsolescence and enhance overall financial performance in the long term.