Deere & Company (DE)

The current ratio for Deere & Company has varied over the past five years, ranging from 1.36 in 2021 to 0.87 in 2023. The ratio indicates the company's ability to meet its short-term obligations with its current assets. In 2024, the current ratio improved to 1.06, suggesting that Deere has slightly strengthened its liquidity position compared to the previous year.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown a decreasing trend over the period. Deere's quick ratio was 0.80 in 2021, indicating a decline to 0.47 in 2023 before slightly increasing to 0.63 in 2024. This trend signals that the company may have been relying more on inventory to meet immediate obligations.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, has mirrored the trend of the quick ratio. Deere's cash ratio was 0.80 in 2021, decreasing to 0.47 in 2023, and then stabilizing at 0.63 in 2024. This indicates that while the company has maintained a relatively stable cash position, there may have been fluctuations in other liquid assets impacting the quick ratio.

Overall, Deere & Company's liquidity ratios show some variability over the years, with improvements in the current ratio in 2024 compared to 2023. However, the declining trend in the quick and cash ratios suggests that the company may have faced challenges in maintaining highly liquid assets to meet short-term obligations during certain periods.

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Additional liquidity measure

The cash conversion cycle of Deere & Company has exhibited a fluctuating trend over the past five years, ranging from as low as 65.29 days to as high as 693.49 days. In the most recent period ending on October 27, 2024, the cash conversion cycle decreased to 449.94 days compared to the previous year's 575.54 days, indicating an improved efficiency in converting investments in raw materials into cash receipts from sales.

The reduction in the cash conversion cycle suggests that Deere & Company has been able to manage its working capital more effectively, leading to a shorter time span between the outflow of cash for inventory and the inflow of cash from sales. This may be attributed to improved inventory management, quicker receivables collection, or extended payables payment terms.

However, the longer cash conversion cycles observed in the years prior to 2024 could indicate challenges in the company's working capital management, potentially leading to increased financing costs or liquidity constraints. It is important for Deere & Company to continue monitoring and optimizing its cash conversion cycle to ensure efficient operations and sustainable financial performance.