Exercise 6-11 (Part Level Submission) Deere & Company is a global manu.docx
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Deere & Company, a global equipment manufacturer, reported its financials for 2014, including inventories, current assets, and current liabilities. The current ratio was calculated both with and without the LIFO reserve, yielding results of 2.38 and 2.47, respectively. These calculations reflect the company's liquidity position based on its assets and liabilities.
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Exercise 6-11 (Part Level Submission) Deere & Company is a global manu.docx
- 1. Exercise 6-11 (Part Level Submission) Deere & Company is a global manufacturer and distributor of agricultural, construction, and forestry equipment. Suppose it reported the following information in its 2014 annual report. 2014 2013 Compute Deere (in millions) 2014 2013 Inventories (LIFO) $2,342 2,973 Current assets 30,584 Current liabilities 12,841 LIFO reserve 1,157 Cost of goods sold 16,863 Solution Current Assets         30,584.00 Current Liability         12,841.00 Current Ratio = Current Assets/ Current Liability Current Ratio = 30,584/12,841 Current Ratio = 2.38 when calculating the current ratio, the LIFO reserve should be added back into the numerator of the equation, resulting in a FIFO inventory. Current Ratio = 30,584 + 1,157 Current Ratio = 31,741 Current Ratio = Current Assets/ Current Liability Current Ratio = 31,741/12,841 Current Ratio = 2.47