Analyzing Effects of LIFO on Inventory Turnover Ratios

The current assets of Exxon Mobil Corporation follow:

$ millions	Year 3	Year 2
Current assets
Cash and cash equivalents	$3,177	$3,657
Notes and accounts receivable, less estimated doubtful amounts	25,597	21,394
Inventories:
Crude oil, products and merchandise	12,871	10,877
Materials and supplies	4,121	4,203
Other current assets	1,368	1,285
Total current assets	$47,134	$41,416

In addition, the following note was provided in its Year 3 10-K report:

Inventories. Crude oil, products and merchandise inventories are carried at the lower of current market value or cost (generally determined under the last-in, first-out methodLIFO). Inventory costs include expenditures and other charges (including depreciation) directly and indirectly incurred in bringing the inventory to its existing condition and location. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory cost. Inventories of materials and supplies are valued at cost or less. In Year 3, Year 2, and Year 1, net income included losses of $10 million, $295 million and $186 million, respectively, attributable to the combined effects of LIFO inventory accumulations and drawdowns. The aggregate replacement cost of inventories was estimated to exceed their LIFO carrying values by $10.8 billion and $8.1 billion at December 31, Year 3 and Year 2 respectively.

Required: