Example: Caterpillar (CAT), 10-K, 2016

Inventories

Inventories are stated at the lower of cost or market. Cost is principally determined using the last in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 60 percent of total inventories at December 31, 2016 and 2015.

If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,139 million and $2,498 million higher than reported at December 31, 2016 and 2015, respectively. Page 82

Below are income statement and balance sheet of CAT and Kubota. Restate the income statement and balance sheet based on FIFO for CAT and calculate selected ratios that are affected by the restatement.

Income statement	CAT LIFO as reported (USD Million)	CAT FIFO as restated	Kubota as reported (JPY Million)
Revenue	38,537		1,596,091
Cost of revenue	28,309		1,122,546
Gross profit	10,228		473,545
SG&A and other operating expenses	9,730		284,768
Operating income	498		188,777
Interest expense, net	505		503
Income before taxes	(7)		188,274
Income taxes	192		56,546
Net income from continuing operations	(199)		131,728

Balance sheet	CAT LIFO as reported (USD Million)	CAT FIFO as restated	Kubota as reported (JPY Million)
Cash and cash equivalents	7,168		169,416
Receivables	14,503		559,488
Inventories	8,614		356,180
Other current assets	1,682		477,990
Total current assets	31,967		1,563,074
Net property, plant and equity	15,322		314,231
Other long-term assets	27,415		793,277
Total assets	74,704		2,670,582
Accounts payable	4,614		98,388
Short-term debt	13,965		496,566
Other current liabilities	7,553		241,659
Total current liabilities	26,132		836,613
Long-term debt	22,750		478,894
Deferred taxes liabilities	237		-
Other long-term liabilities	12,448		156,314
Total liabilities	61,567		1,471,821
Common stock	5,277		84,605
Retained earnings	27,377		19,539
Treasury stock	(17,478)		(192)
Others	(2,039)		1,094,809
Total stockholders equity	13,137		1,198,761
Total liabilities and equity	74,704		2,670,582

Ratios	CAT LIFO as reported	CAT FIFO as restated	Kubota as reported
Gross profit margin	26.54%		29.67%
Net profit margin	-0.52%		8.25%
Inventory turnover	3.29		3.15
Current ratio	1.22		1.87
Total liabilities to equity	4.69		1.23