Financial Analysis of John Deere

1080 Words Jan 13th, 2016 5 Pages
Assignment 1: Financial Analysis of John Deere
David Schwendinger
Strayer University
Financial Accounting for Managers
Acc 556
Dr. James Turkvant
May 11, 2015 Assignment 1: Financial Analysis of John Deere
In this paper I will provide analysis of the annual report provided by the company. I will specifically looking at this report from an investor’s prospective, attempting to ascertain whether John Deere is managing its finances in manner that will draw investors. Other, non-financial, aspects of John Deere will also be considered that could be used as decision points for potential backers. This will also be considered in the larger context of the construction and farm machinery industry and some of John Deere’s competitors.
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This shows a different picture as the total assets increase over current assets by about $15 Billion dollars and the total liabilities increase over current liabilities by $31 Billion. (Deere & Company, 2014, p. 32) This shows a debt to assets ratio of 85%. This level of debt could make a prospective investor very leery. This is countered the John Deere’s times interest earned at 5.4. While this number is not great, it is not terrible either. If it were lower, that combined with the debt to asset ratio would be a very large warning flag.
Determining whether to invest in John Deere or not is not a simple decision as the numbers do not point to a clear answer. They also are only one point of analysis when looking at the industry or the stock market as a whole. John Deere is ranked second in its industry, behind Caterpillar. (Fortune, 2014) This may to seem to indicate that investing in Caterpillar would be a better decision but while John Deere’s sales were only up 4.5%, Caterpillar’s were down 15.5% from the previous year. (Fortune, 2014) Navistar International Corp is another competitor that has been struggling with the current state of the Industrial Equipment industry. They have seen their stock price drop by about a third in the last year. ("Navistar International Corp (NAV:New York)," 2015) Now does this mean that an investment in John Deere is a wise one? Considering the reduction in

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