Accounting

E. You want to compare Caterpillar's operations for fiscal 2007 to those of an international competitor. CNH Global, headquartered in the Netherlands. (CNH Global financial statements follow the Caterpillar financial statements at the end of the case.) In particular you want to compare a number of inventory-related metrics. However, the two companies do not use the same inventory costing methods: Caterpillar uses LIFO for a large portion of its inventory whereas CNH Global uses FIFO to cost all of its inventory. International financial reporting standards (IPRS) do not permit companies to use the LIFO method. To compare the two companies, you first must restate Caterpillar's relevant balance sheet and income statement numbers from LIFO to FIFO. To do this, we assume that Caterpillar had instead always used the FIFO method of inventory costing. Use the table below to aggregate the data you need to covert LIFO to FIFO for Caterpillar. For these calculations, assume that the marginal tax rate for Caterpillar is 35%%. Caterpillar, Inc. Sile LIFO Cost of goods sold (COGS) LIFO Net income LIFO Inventory from the balance sheet LIFO Reserve from financial statement notes Total Assets from the balance sheet Calculations to convert LIFO to FIFO: 2017 2006 2005 FIFO Inventory = LIFO Inventory + LIFO Reserve FIFO Assets - LIFO Assets + LIFO Reserve Increase in LIFO Reserve during the year FIFO COGS - LIFO COGS = Increase in LIFO Reserve After-tax effect of LIFO - (1- Marginal tax rate) * Increase in LIFO Reserve FIFO Net income - LIFO Net income + After- tax effect of LIFO method Caterpillar Inc. and CNH Global N.V.-Inventory This document is whatred for us by Ryan Galloway from 824/2030 is 1019213), Inthe carr Any urauthoriand wes or reproduction al this document is sicily prohibited. Complete the table below using information from the financial statements and from the table you completed above. Comment on the results comparing CNH Global with Caterpillar's ' As Reported' and "As if FIFO' income statement and balance sheet information. Year Ended December 31, 2007 Caterpillar CNN Global As Reported As if FIFO As Reported Common-size Cost of goods sold' Net income Growth in Net income Common-size Net income Total asset Inventory Common-size Inventory Notes. To common size items from the income statement, divide by total revenue attributable to equipment sales (that is, do not include revenues from each company's financing operations). "To common size items from the balance sheet, divide by total assets.STATEMENT 1 Caterpillar Inc. Consolidated Results of Operations for the Years Ended December 31 (Dollars in millions except per share data) 2007 2006 2005 Sales and revenues: Sales of Machinery and Engines .. ..... $41,962 $38,869 $34,006 Revenues of Financial Products. ...- 2.996 2,648 2,333 Total sales and revenues . ..... 44.958 41,517 36,339 Operating costs: Cost of goods sold. . 32.626 29,519 26 558 Seling, general and administrative expenses 3.821 3,706 3,190 Research and development expenses.. 1,404 1,347 1,084 Interest expense of Financial Products 1.132 1,023 768 Other operating expenses . 1.054 971 955 Total operating costs . 40.037 36,596 32,565 Operating profit .. .... 4.921 4.921 3,784 Interest expense excluding Financial Products. .- 288 274 260 Other income (expense) ... ..... 214 377 Consolidated profit before taxes . 4.953 4,861 3,901 Provision for income taxes ..... 1.485 1,405 1,120 Profit of consolidated companies . 3.468 1,456 2,781 Equity in profit (loss) of unconsolidated affiliated companies.. 73 81 73 Profit ..... $ 3.541 $ 3,537 $ 2,854 Profit per common share.. ... ..... 5.95 $ 537 $ 421 Profit per common share - diluted".. 5.37 : 5.17 $ 404 Weighted average common shares outstanding (millions) - Basic. 638.2 658 7 6784 - Diluted " 659.5 683 8 705.8 Cash dividends declared per common share.. ......- $ 1 38 $ 1.15 $ 96 " Diluted by assumed exercise of stock-based compensation awards, using the treasury stock method.STATEMENT 2 Consolidated Financial Position at December 31 (Dollars in millions) 2007 2006 2005 Assets Current assets: Cash and short-term investments $ 1,122 $ 530 $ 1,106 Receivables - trade and other .. 8,249 8,607 7.906 Receivables - Finance. ... 7.503 6,804 6,442 Deferred and refundable income taxes . .. . 816 733 255 Prepaid expenses and other current assets . 583 638 2,250 Inventories ... . 7,204 6,351 5.224 Total current assets . . 25,477 23,663 23, 185 Property, plant and equipment - net .. ..... 3.997 3,851 7,98 Long-term receivables - trade and other ... 685 860 1,037 Long-term receivables - finance . 13 462 11.531 10.301 Investments in unconsolidated affiliated companies.. 598 562 565 Noncurrent deferred and refundable income taxes. 1.553 1,949 857 Intangible assets . 475 387 424 Goodwill..... 1.963 1,904 1,451 Other assets . 1,922 1,742 Total assets .. ..... $56,132 $51,449 $47,553 Liabilities Current liabilities: Short-term borrowings: Machinery and Engines.. 187 165 $ 871 Financial Products 5,281 1,990 4,698 Accounts payable- 4,723 4,085 3,412 Accrued expenses . . 3,178 2.923 2,617 Accrued wages, salaries and em 1,126 938 1,601 Customer advances.- 1.442 921 454 Dividends payable . ..-. 225 194 163 Other current liabilities . . . .. ... 951 1,145 1,012 Long-term debt due within one year Machinery and Engines.. 180 418 340 Financial Products 4,952 4,043 1,159 Total current liabilities . . 22 245 19,822 19,332 Long-term debt due after one year. Machinery and Engines.. .. ... .- 3.639 3,694 2,717 Financial Products . ..... ...- 14, 190 13.986 12,960 Liability for postemployment benefits . 5,059 5,879 3,161 Other liabilities ...... 2,116 1,209 951 Total liabilities 47.249 41,590 39. 121 Commitments and contingencies (Notes 22 and 23) Stockholders equity Common stock of $1.00 par: Authorized shares: 900,000 000 Issued shares: (2007, 2006 and 2005 - 814,894 624) at paid-in amount -. .. ... ... ..... ... .-.... .. .m. .mem. . .m. .";.";;; 2,744 2,465 1,859 Treasury stock (2007 - 190,908,490 shares: 2006 - 169,086,418 shares and 2006 - 144,027,406 shares) at cost... ... .... (9.451) (7.352) (4,637) Profit employed in the business ....- 17,395 14,593 11,808 Accumulated other comprehensive income. 1.808) (2,847) (598) Total stockholders' equity .. 8,883 6,859 3.432 Total liabilities and stockholders' equity .....- ... .. $56,132 $51,449 $47.553 See accompanying notes to Consolidated Financial Statements. A-b This document is authorized for use by Ryan Galloway, from 8/26/2020 to 10/19 2020, in the course: ACT15: Financial Fosporting and Analysis - Fall 2020, University of Hartford Any unauthorized use or reproduction of this document is strictly prohibitedCNH GLOBAL N.V. CONSOLIDATED STATEMENTS OF INCOME For the Years Ended December 31, 2007, 2006 and 2005 Supplemental Information Consolidated Financial Services 1007 2016 2107 2016 2005 millions, cacept per share data) Revenues: Net sales $14.971 $12,115 $11.806 $14,971 $12,115 $11,806 $ - S- Finance and interest income 190 129 1.131 952 201 15.964 12.998 12.575 15,161 12,292 11,935 1.131 952 801 Costs and Expenses: Cost of goods sold 12.154 9.933 9.934 12,154 9,933 9.934 Selling, general and administrative 1.436 1,248 1,177 1,183 1,015 964 253 233 213 Research, development and engineering 409 367 303 409 367 3703 Restructuring 85 96 73 85 94 71 2 Interest expense-Fiat affiliates 140 66 39 44 72 101 17 27 Interest expense-other 561 $12 152 319 272 269 378 323 240 Interest compensation to Financial Services 247 235 159 Other, net 349 280 233 182 70 54 36 15.134 12.581 12.318 14.660 12,198 11.960 802 629 518 Income (loss) before income taxes, minority interest and equity in income of unconsolidated subsidiaries and affiliates 830 417 257 501 94 (25) 329 323 283 Income tax provision 354 165 116 245 56 24 109 109 92 Minority interest 15 16 26 16 Equity in income of unconsolidated subsidiaries and affiliates Financial Services 229 222 200 Equipment Operations 18 39 89 48 39 Net income 167 292 163 Per Share Data: Basic earnings per share 2.36 5 137 3 0.77 Diluted earnings per share 2.36 1.23 0.70CNH GLOBAL N.V. CONSOLIDATED BALANCE SHEETS As of December 31. 2007 and 2006 Supplicantal Information Financial Consolidated MOT jin million, except share data) ASSETS Current Assets: Cash and cich equivalents 5 1 025 5 1.174 5 405 7013 5 610 5 471 Deposits in Fial affiliates cich management pools 49 1.157 74 Accounts and noles receivable, net 1.542 1311 5.434 2,475 Infericement miles recitable 1.348 3.48 SEL 1735 Delemed incoc lairs 377 424 207 Prepayments and other 114 110 Total current insects 13 363 9.000 6 360 ,114 Long-lem recenables 1872 3871 Intersegment lung-Icam noles receivable Property, plant and equipment, nel 1.510 1.30 1 905 1.297 Other Apache Incid ments in unconsolidated whoidiaries and all lies 457 Imcement in Financial Services Equipment on operating Icings, net 254 25 Goodwill 2382 1 365 2 231 145 Other intangible asicla net 760 742 776 Other mascis 1.456 852 Total other assets CIE'S 6.130 1063 LII Total 523 745 SIR 274 51 6.637 514.514 511.294 $7,102 LIABILITIES AND SHAREHOLDERS' EQUITY Current maturilies of long-term debt-Fial allskates 5 153 5 153 5 33 Cunical maturities of long-term debt-other 53 1.332 974 Shod-Jem debl-Fial affiliates 2 562 260 2 201 Shod-Jem dchl-other 1.707 465 228 1.242 604 eric gmient short-term debt and current maturities of long-term debt Accounts parable 2907 1 939 161 Restructuring Hability 10 Other scarued lishiblies 2144 2,160 433 Total current Habilities 11.248 6.440 7.451 Long-lem dell-Fial affiliates 1.515 19 715 Long-len dell-other 2365 4,063 1377 2 366 1687 Intersegment long-term act Other Liabiblics: Pension, poolretirement and other postemployment benefits Other liabilities 245 349 199 34 Total other liabilities Commitments and contingencies Minority intered 117 116 109 Sharebalder equity: Preference shines, $1.00 par value; authorized and bsued 74,200,030 shares in 1007 and 2006 15 Common shines, 62 25 par value, authorized 4001000 000 hurca in MOT and 30106, issued 137,314, 183 in 2007 and 236 319,791 shares in 2006 912 205 Paid-in capital 6117 6.117 1.234 1.205 Treasury shock, 154813 hoursin 1007 and X306, al cost Retained cominga ( deficit) 1763 354 201 Accumulated other comprehensive income flum) 142 Total shareholders' equity 6 302 Total $23 745 SIR.274 516 637 514.514 51 1 259