Deere & Company (DE)

Deere & Company's liquidity ratios provide insights into the company's ability to meet its short-term obligations. The current ratio fluctuated over the analyzed periods, ranging from a low of 0.67 to a high of 2.20. A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered a positive sign. However, a declining trend in the current ratio over time may raise concerns about the company's liquidity position.

The quick ratio, which measures a company's ability to meet short-term obligations without relying on the sale of inventory, also exhibited variability, with values ranging from 0.15 to 0.54. A quick ratio above 1 is considered healthy, indicating that the company can cover its short-term liabilities with its most liquid assets. Deere & Company's quick ratio generally stayed below 1, suggesting a potential dependency on inventory to meet short-term obligations.

The cash ratio, which is a more stringent measure of liquidity as it only considers cash and cash equivalents, showed a similar pattern to the quick ratio, ranging from 0.15 to 0.54. A cash ratio below 1 signifies that the company does not hold sufficient cash to cover its current liabilities outright. Deere & Company's cash ratio results point to a potential need for improvements in cash management to enhance its liquidity position.

Overall, Deere & Company's liquidity ratios indicate some fluctuations and areas for potential improvement in managing short-term obligations. Continuous monitoring and strategic adjustments may be necessary to maintain a healthy liquidity position in the future.

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Additional liquidity measure

The cash conversion cycle of Deere & Company fluctuated over the analyzed period, ranging from a high of 189.53 days on May 1, 2022, to a low of 115.92 days on July 31, 2023. This indicates that the company took longer to convert its investments in inventory, accounts receivable, and accounts payable into cash in some periods compared to others.

Overall, a decreasing trend in the cash conversion cycle is observed from May 1, 2022, to July 31, 2023, suggesting an improvement in the company's efficiency in managing its working capital. However, there was an increase in the cycle from July 31, 2023, to January 31, 2024, before showing some fluctuation in the subsequent periods.

The cash conversion cycle is important as it reflects how quickly a company can convert its resources into cash. A shorter cycle generally indicates better efficiency in managing working capital, while a longer cycle may imply potential liquidity and operational efficiency concerns. Deere & Company should aim to maintain a healthy balance in its cash conversion cycle to ensure optimal cash flow management and operational performance.