Deere & Company manufactures, distributes, and finances a full range of agricult

Question

Deere & Company manufactures, distributes, and finances a full range of agricultural equipment; a broad range of industrial equipment for construction, forestry, and public works; and a variety of lawn and grounds care equipment. The company also provides credit, health care, and insurance products for businesses and the general public. Consider the following information from the Deere & Company 2000 Annual Report: (in millions) 1997 1998 1999 2000 Sales          12,791          13,822          11,751          13,137 Cost of goods sold             8,481             9,234             8,178             8,936 Gross margin             4,310             4,588             3,573             4,201 1. Prepare a statement showing the trend percentages for each item using 1997 as the base year. 2. Comment on the trends noted in part (1). Deere & Company manufactures, distributes, and finances a full range of agricultural equipment; a broad range of industrial equipment for construction, forestry, and public works; and a variety of lawn and grounds care equipment. The company also provides credit, health care, and insurance products for businesses and the general public. Consider the following information from the Deere & Company 2000 Annual Report: (in millions) 1997 1998 1999 2000 Sales          12,791          13,822          11,751          13,137 Cost of goods sold             8,481             9,234             8,178             8,936 Gross margin             4,310             4,588             3,573             4,201 1. Prepare a statement showing the trend percentages for each item using 1997 as the base year. 2. Comment on the trends noted in part (1).

Explanation / Answer

1) Prepare statement of trend percentage :

2) Sales is increase over the years but cost of goods sold increasing higher so gross margin is decreasing over the years.

1997 1998 1999 2000 Sales 100% 108.08% 92.87% 102.71% Cost of goods sold 100% 108.88% 96.43% 105.36% Gross margin 100% 106.45% 82.90% 97.47%

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