Question

Questions relate to John Deere Stock (Q2 2018). All websites should show the same values, however I am using MSN Money as the site that I get my data from for grading. Also note that when looking at financials, you will need to select the Quarterly button to get the quarterly results. Yahoo Stock Price History can also be helpful and you will want to use end-of-day close values. Show and compute the following (don’t use Key Ratios precomputed from the site). Compute the ratios using the methods described in this class (which may not always give you the same number as shown in Key Ratios). In particular, many websites report Financial Ratios based on the last reported annual results, but in this assignment we are reporting ratios for Q2 2018. Note that sales = Total Revenue, and Shares outstanding is reported at the end of the Balance Sheet as “Ordinary Shares Outstanding”

Find: 1. Current Assets

2. Current Liabilities

3. Working Capital (compute).

4. Book Value Per Share (computed)

5. Gross Margin. (computed)

6. Net Margin (computed)

7. Inventory Turnover Ratio (computed)

8. Return on Equity (computed)

9.Quick Ratio (computed)

10.P/E Ratio

Caterpillar Stock (Q1 2018)

1. Gross Margin (compute)

2.Net Margin (compute)

3.Quick Ratio (compute)

4.Inventory Turnover Ratio (compute)

5.ROE (Return on Equity), (Compute)

6.P/E Ratio (Compute)

Answer 1

Values are taken from MSN Money for the period Q1 FY18 (Values are in $ Millions except price and Earning per share) :

John Deere Stock (Q2 2018)

1. Current Assets = 17,601

Current Liabilities = 25,085

Working Capital = Current Assets - Current Liabilities

2. So Working Capital = 17,601 - 25,085 = -7484

3. Book Value per Share = 32.10

Total Revenue :29,115.5

Cost of Revenue : 20,101.5

Gross Profit= Total Revenue - Cost of Revenue

So Gross Profit = 29115.5 - 20101.5= 9014

Now, Gross Margin = Gross Profit / Total Revenue

5. So Gross Margin = 9014 / 29115.5 = 30.95

Net Income = 2,159

Net Margin = Net Income / Total Revenue

6. So Net Margin = 2159 / 29115.5 = 7.41

7. Inventory Turnover ration = 4.17

8. ROE = 20.16%

9. Quick Ratio =0.43

Price of Stock = 138.69

Earning per share (Diluted) = 3.73

10. P/E = 138.69/3.73 = 37.18 ( This is current P/E ratio)

Caterpillar Stock (Q1 2018)

Total Revenue :12,859

Cost of Revenue : 8,566

Gross Profit= Total Revenue - Cost of Revenue

So Gross Profit = 12859 - 8566 = 4293

Now, Gross Margin = Gross Profit / Total Revenue

So Gross Margin = 4293 / 12859= 33.38

Net Income = 1,665

Net Margin = Net Income / Total Revenue

So Net Margin = 1665 / 12859 = 12.95

Cash = 7,888

Account receivables = 16,666

Current Liabilities = 27,402

Quick Ratio =( Cash + Receivable ) / Current Liabilities

So Quick Ratio = (7888+16666) / 27402 = 0.896

Inventory for starting of Q1 FY 18 =  Inventory for ending of Q4 FY 17 = 10,018 (a)

Inventory for ending of Q1 FY 18 = 10,947 (b)

Average Inventory = (a+b)/2

So Average Inventory = (10018+10947)/2 = 10482.5

Cost of Sales =  8,566

Inventory Turnover = Cost of Sales / Average inventory

So Inventory Turnover = 8556 / 10482.5 = 0.816

Net Income = 1,665

Shareholders' equity = 15,206

Return on Equity (ROE) = Net Income / Shareholders' equity

So ROE = 1665 / 15206 = 0.109 = 10.9%

Price of Stock = 136.58

Earning per share (Diluted) = 2.74

P/E = 136.58/2.74 = 49.84 ( This is current P/E ratio)