Part B

The following details are for questions 1620. Each individual question will appear below the details.

Caterpillar Inc (CAT) has the following excerpts from their financial statements:

Interest Period	December 31, 2016	December 31, 2015	December 31, 2014
Inventory (in $ Millions)	9,615	9,700	12,205
Net Income (in $ Millions)	(67)	2,512	2,452

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 $1,639 million and $2,498 million higher than reported at December 31, 2016 and 2015, respectively.

Assume a corporate tax rate of 35%.

Question

If CAT had used FIFO method instead of LIFO method...

The amount CATs 2016 net cash from operations would change by (rounded to the nearest million):

Group of answer choices

$301 Million increase

$126 Million increase

$76 Million decrease

No change in cash from operations

If CAT had used FIFO method instead of LIFO method...

Net profit (loss) CAT would report in 2016 (rounded to the nearest million) is:

$300 Million (loss)

+ $359 Million (profit)

+ $200 Million (profit)

$625 Million (loss)

The cumulative amount of income tax savings that CAT generated through 2016 by using LIFO instead of FIFO (rounded to the nearest million) is: