Reference no: EM131695149
Inventory Valuation Methods
Download the 2013 - 2015 financial statements for Caterpillar, Inc.
For this analysis, you may assume a US corporate statutory tax rate of 35 percent.
1. What inventory values would Caterpillar report for 2013, 2014, and 2015 if it had used the FIFO method instead of the LIFO method?
2. What amount would Caterpillar's cost of goods sold for 2014 and 2015 be if it had used the FIFO method instead of the LIFO method?
3. What net income (profit) would Caterpillar report for 2014 and 2015 if it had used the FIFO method instead of the LIFO method?
4. By what amount would Caterpillar's 2014 and 2015 net cash flow from operating activities increase (decrease) if it had used the FIFO method instead of the LIFO method?
5. What is the cumulative amount of income tax savings that Caterpillar has generated through 2015 by using the LIFO method instead of the FIFO method?
6. What amount would be added to Caterpillar's retained earnings (profit employed in the business) at December 31, 2015 if Caterpillar had used the FIFO method instead of the LIFO method?
7. What would be the change in Caterpillar's cash balance if Caterpillar had used the FIFO method instead of the LIFO method?
8. Calculate and compare the following for 2015 under the LIFO method and the FIFO method: inventory turnover ratio, days in inventory on hand, gross profit margin, net profit margin, return on assets, current ratio and total liabilities-to-equity ratio.