**Financial Statement Analysis: Profitability and Stockholder Ratios** **CP 17-4 Profitability and Stockholder Ratios** Deere & Co. manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere & Co.'s credit division loans money to customers to finance the purchase of their farm and construction equipment. The following information is available for three recent years (in millions except per-share amounts): | | Year 3 | Year 2 | Year 1 | |---------------------------|---------|---------|---------| | Net income (loss) | $3,064.7| $2,799.9| $1,865.0| | Preferred dividends | $0.00 | $0.00 | $0.00 | | Interest expense | $782.8 | $759.4 | $811.4 | | Shares outstanding for | | | | | computing earnings per share | 397 | 417 | 424 | | Earnings per share | $1.79 | $1.52 | $1.16 | | Cash dividend per share | | | | | Average total assets | $52,237 | $45,737 | $42,200 | | Average stockholders' equity | $6,821 | $6,545 | $5,555 | | Average stock price per share | $79.27 | $80.48 | $61.18 | **Tasks:** 1. **Calculate the following ratios for each year (Round percentages to one decimal place):** a. Rate earned on total assets b. Rate earned on stockholders’ equity c. Earnings per share d. Dividend yield e. Price-earnings ratio 2. **What is the ratio of average liabilities to average stockholders’ equity for Year 3?** 3. **Based on these data, evaluate Deere & Co.’s performance.** (Note: The table above does not include diagrams or graphs.)
**Financial Statement Analysis: Profitability and Stockholder Ratios** **CP 17-4 Profitability and Stockholder Ratios** Deere & Co. manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere & Co.'s credit division loans money to customers to finance the purchase of their farm and construction equipment. The following information is available for three recent years (in millions except per-share amounts): | | Year 3 | Year 2 | Year 1 | |---------------------------|---------|---------|---------| | Net income (loss) | $3,064.7| $2,799.9| $1,865.0| | Preferred dividends | $0.00 | $0.00 | $0.00 | | Interest expense | $782.8 | $759.4 | $811.4 | | Shares outstanding for | | | | | computing earnings per share | 397 | 417 | 424 | | Earnings per share | $1.79 | $1.52 | $1.16 | | Cash dividend per share | | | | | Average total assets | $52,237 | $45,737 | $42,200 | | Average stockholders' equity | $6,821 | $6,545 | $5,555 | | Average stock price per share | $79.27 | $80.48 | $61.18 | **Tasks:** 1. **Calculate the following ratios for each year (Round percentages to one decimal place):** a. Rate earned on total assets b. Rate earned on stockholders’ equity c. Earnings per share d. Dividend yield e. Price-earnings ratio 2. **What is the ratio of average liabilities to average stockholders’ equity for Year 3?** 3. **Based on these data, evaluate Deere & Co.’s performance.** (Note: The table above does not include diagrams or graphs.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Financial Statement Analysis: Profitability and Stockholder Ratios**
**CP 17-4 Profitability and Stockholder Ratios**
Deere & Co. manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere & Co.'s credit division loans money to customers to finance the purchase of their farm and construction equipment.
The following information is available for three recent years (in millions except per-share amounts):
| | Year 3 | Year 2 | Year 1 |
|---------------------------|---------|---------|---------|
| Net income (loss) | $3,064.7| $2,799.9| $1,865.0|
| Preferred dividends | $0.00 | $0.00 | $0.00 |
| Interest expense | $782.8 | $759.4 | $811.4 |
| Shares outstanding for | | | |
| computing earnings per share | 397 | 417 | 424 |
| Earnings per share | $1.79 | $1.52 | $1.16 |
| Cash dividend per share | | | |
| Average total assets | $52,237 | $45,737 | $42,200 |
| Average stockholders' equity | $6,821 | $6,545 | $5,555 |
| Average stock price per share | $79.27 | $80.48 | $61.18 |
**Tasks:**
1. **Calculate the following ratios for each year (Round percentages to one decimal place):**
a. Rate earned on total assets
b. Rate earned on stockholders’ equity
c. Earnings per share
d. Dividend yield
e. Price-earnings ratio
2. **What is the ratio of average liabilities to average stockholders’ equity for Year 3?**
3. **Based on these data, evaluate Deere & Co.’s performance.**
(Note: The table above does not include diagrams or graphs.)
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