Please find 1-5 based on the financial statements given above.

2.LIFO Inventories -- ExxonMobil, 2016 Attached please find Income Statement, Balance Sheet, and LIFO footnote from ExxonMobil's 2016 annual report. Answer the following questions. COGS is crude oil and product purchases and inventory is crude oil, products and merchandise. Assume a 35% tax rate. 1.Calculate the firm's ratio of income before income taxes divided by end of year total assets (like a pretax ROA). 2.Recalculate the ratio in #1 assuming that the firm used only FIFO. 3. Recalculate the ratio in #1 under LIFO, assuming that the firm did not liquidate any inventory (i.e., maintained its beginning inventory level). 4. What was the approximate inventory inflation rate? 5. What would the LIFO reserve have been at year end if there was no liquidation? CONSOLIDATED STATEMENT OF INCOME Note Reference Number 2016 2014 2015 (millions of dollars) 7 218,608 4,806 2,680 226,094 259,488 7,644 1,750 268,882 394,105 13,323 4,511 411,939 9 Revenues and other income Sales and other operating revenue (1) Income from equity affiliates Other income Total revenues and other income Costs and other deductions Crude oil and product purchases Production and manufacturing expenses Selling, general and administrative expenses Depreciation and depletion Exploration expenses, including dry holes Interest expense Sales-based taxes (1) Other taxes and duties Total costs and other deductions Income before income taxes Income taxes Net income including noncontrolling interests Net income attributable to noncontrolling interests Net income attributable to ExxonMobil 19 104,171 31,927 10,799 22,308 1,467 453 21,090 25,910 218,125 7,969 (406) 8,375 535 7,840 130,003 35,587 11,501 18,048 1,523 311 22,678 27,265 246,916 21,966 5,415 16,551 401 16,150 225,972 40,859 12,598 17,297 1,669 286 29,342 32,286 360,309 51,630 18,015 33,615 1,095 32,520 19 19 12 Earnings per common share (dollars) 1.88 3.85 7.60 12 Earnings per common share - assuming dilution (dollars) 1.88 3.85 7.60 (1) Sales and other operating revenue includes sales-based taxes of $21,090 million for 2016, $22,678 million for 2015 and $29,342 million for 2014. The information in the Notes to Consolidated Financial Statements is an integral part of these statements. CONSOLIDATED BALANCE SHEET Note Reference Number Dec. 31 Dec. 31 2016 2015 millions of dollars) 3,657 21,394 3,705 19,875 6 3 Assets Current assets Cash and cash equivalents Notes and accounts receivable, less estimated doubtful amounts Inventories Crude oil, products and merchandise Materials and supplies Other current assets Total current assets Investments, advances and long-term receivables Property, plant and equipment, at cost, less accumulated depreciation and depletion Other assets, including intangibles, net Total assets 10,877 4,203 1,285 41,416 35,102 12,037 4,208 2,798 42,623 34,245 8 9 244,224 9,572 330,314 251,605 8,285 336,758 6 6 Liabilities Current liabilities Notes and loans payable Accounts payable and accrued liabilities Income taxes payable Total current liabilities Long-term debt Postretirement benefits reserves Deferred income tax liabilities Long-term obligations to equity companies Other long-term obligations Total liabilities 14 13,830 31,193 2,615 47,638 28,932 20,680 34,041 5,124 20,069 156,484 18,762 32,412 2,802 53,976 19,925 22,647 36,818 5,417 21,165 159,948 17 19 Commitments and contingencies 16 12,157 407,831 (22,239) 11,612 412,444 (23,511) Equity Common stock without par value (9,000 million shares authorized, 8,019 million shares issued) Earnings reinvested Accumulated other comprehensive income Common stock held in treasury (3,871 million shares in 2016 and 3,863 million shares in 2015) ExxonMobil share of equity Noncontrolling interests Total equity Total liabilities and equity (230,424) 167,325 6,505 173,830 330,314 (229,734) 170,811 5,999 176,810 336,758 The information in the Notes to Consolidated Financial Statements is an integral part of these statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Accounting Changes In May 2014, the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements, and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. Sales and Other Operating Revenue" on the Consolidated Statement of Income includes sales, excise and value-added taxes on sales transactions. When the Corporation adopts the standard, revenue will exclude sales-based taxes collected on behalf of third parties. This change in reporting will not impact earnings. The Corporation expects to adopt the standard using the Modified Retrospective method, under which prior years' results are not restated, but supplemental information on the impact of the new standard is provided for 2018 results. The Corporation continues to evaluate other areas of the standard which are not expected to have a material effect on the Corporation's financial statements. In February 2016, the Financial Accounting Standards Board issued a new standard, Leases. The standard requires that all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and a lease liability. The standard is required to be adopted beginning January 1, 2019, with early adoption permitted. ExxonMobil is evaluating the standard and its effect on the Corporation's financial statements and plans to adopt it in 2019. Effective September 30, 2016, the Corporation early-adopted Accounting Standard Update no. 2015-17 Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes on a prospective basis. This update eliminates the requirement to classify deferred tax assets and liabilities as current and noncurrent, and instead requires all deferred tax assets and liabilities to be classified as noncurrent. See Note 19. 3. Miscellaneous Financial Information Research and development expenses totaled $1,058 million in 2016, $1,008 million in 2015 and $971 million in 2014. Net income included before-tax aggregate foreign exchange transaction gains of $29 million in 2016, and losses of $119 million in 2015 and $225 million in 2014, respectively. In 2016, 2015 and 2014, net income included losses of $295 million and $186 million, and a gain of $187 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 $8.1 billion and $4.5 billion at December 31, 2016, and 2015, respectively. Crude oil, products and merchandise as of year-end 2016 and 2015 consist of the following: 2016 2015 (billions of dollars) Crude oil Petroleum products Chemical products Gas/other Total 3.9 3.7 2.8 0.5 10.9 4.2 4.1 2.7 1.0 12.0 2.LIFO Inventories -- ExxonMobil, 2016 Attached please find Income Statement, Balance Sheet, and LIFO footnote from ExxonMobil's 2016 annual report. Answer the following questions. COGS is crude oil and product purchases and inventory is crude oil, products and merchandise. Assume a 35% tax rate. 1.Calculate the firm's ratio of income before income taxes divided by end of year total assets (like a pretax ROA). 2.Recalculate the ratio in #1 assuming that the firm used only FIFO. 3. Recalculate the ratio in #1 under LIFO, assuming that the firm did not liquidate any inventory (i.e., maintained its beginning inventory level). 4. What was the approximate inventory inflation rate? 5. What would the LIFO reserve have been at year end if there was no liquidation? CONSOLIDATED STATEMENT OF INCOME Note Reference Number 2016 2014 2015 (millions of dollars) 7 218,608 4,806 2,680 226,094 259,488 7,644 1,750 268,882 394,105 13,323 4,511 411,939 9 Revenues and other income Sales and other operating revenue (1) Income from equity affiliates Other income Total revenues and other income Costs and other deductions Crude oil and product purchases Production and manufacturing expenses Selling, general and administrative expenses Depreciation and depletion Exploration expenses, including dry holes Interest expense Sales-based taxes (1) Other taxes and duties Total costs and other deductions Income before income taxes Income taxes Net income including noncontrolling interests Net income attributable to noncontrolling interests Net income attributable to ExxonMobil 19 104,171 31,927 10,799 22,308 1,467 453 21,090 25,910 218,125 7,969 (406) 8,375 535 7,840 130,003 35,587 11,501 18,048 1,523 311 22,678 27,265 246,916 21,966 5,415 16,551 401 16,150 225,972 40,859 12,598 17,297 1,669 286 29,342 32,286 360,309 51,630 18,015 33,615 1,095 32,520 19 19 12 Earnings per common share (dollars) 1.88 3.85 7.60 12 Earnings per common share - assuming dilution (dollars) 1.88 3.85 7.60 (1) Sales and other operating revenue includes sales-based taxes of $21,090 million for 2016, $22,678 million for 2015 and $29,342 million for 2014. The information in the Notes to Consolidated Financial Statements is an integral part of these statements. CONSOLIDATED BALANCE SHEET Note Reference Number Dec. 31 Dec. 31 2016 2015 millions of dollars) 3,657 21,394 3,705 19,875 6 3 Assets Current assets Cash and cash equivalents Notes and accounts receivable, less estimated doubtful amounts Inventories Crude oil, products and merchandise Materials and supplies Other current assets Total current assets Investments, advances and long-term receivables Property, plant and equipment, at cost, less accumulated depreciation and depletion Other assets, including intangibles, net Total assets 10,877 4,203 1,285 41,416 35,102 12,037 4,208 2,798 42,623 34,245 8 9 244,224 9,572 330,314 251,605 8,285 336,758 6 6 Liabilities Current liabilities Notes and loans payable Accounts payable and accrued liabilities Income taxes payable Total current liabilities Long-term debt Postretirement benefits reserves Deferred income tax liabilities Long-term obligations to equity companies Other long-term obligations Total liabilities 14 13,830 31,193 2,615 47,638 28,932 20,680 34,041 5,124 20,069 156,484 18,762 32,412 2,802 53,976 19,925 22,647 36,818 5,417 21,165 159,948 17 19 Commitments and contingencies 16 12,157 407,831 (22,239) 11,612 412,444 (23,511) Equity Common stock without par value (9,000 million shares authorized, 8,019 million shares issued) Earnings reinvested Accumulated other comprehensive income Common stock held in treasury (3,871 million shares in 2016 and 3,863 million shares in 2015) ExxonMobil share of equity Noncontrolling interests Total equity Total liabilities and equity (230,424) 167,325 6,505 173,830 330,314 (229,734) 170,811 5,999 176,810 336,758 The information in the Notes to Consolidated Financial Statements is an integral part of these statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Accounting Changes In May 2014, the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements, and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. Sales and Other Operating Revenue" on the Consolidated Statement of Income includes sales, excise and value-added taxes on sales transactions. When the Corporation adopts the standard, revenue will exclude sales-based taxes collected on behalf of third parties. This change in reporting will not impact earnings. The Corporation expects to adopt the standard using the Modified Retrospective method, under which prior years' results are not restated, but supplemental information on the impact of the new standard is provided for 2018 results. The Corporation continues to evaluate other areas of the standard which are not expected to have a material effect on the Corporation's financial statements. In February 2016, the Financial Accounting Standards Board issued a new standard, Leases. The standard requires that all leases with an initial term greater than one year be recorded on the balance sheet as a lease asset and a lease liability. The standard is required to be adopted beginning January 1, 2019, with early adoption permitted. ExxonMobil is evaluating the standard and its effect on the Corporation's financial statements and plans to adopt it in 2019. Effective September 30, 2016, the Corporation early-adopted Accounting Standard Update no. 2015-17 Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes on a prospective basis. This update eliminates the requirement to classify deferred tax assets and liabilities as current and noncurrent, and instead requires all deferred tax assets and liabilities to be classified as noncurrent. See Note 19. 3. Miscellaneous Financial Information Research and development expenses totaled $1,058 million in 2016, $1,008 million in 2015 and $971 million in 2014. Net income included before-tax aggregate foreign exchange transaction gains of $29 million in 2016, and losses of $119 million in 2015 and $225 million in 2014, respectively. In 2016, 2015 and 2014, net income included losses of $295 million and $186 million, and a gain of $187 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 $8.1 billion and $4.5 billion at December 31, 2016, and 2015, respectively. Crude oil, products and merchandise as of year-end 2016 and 2015 consist of the following: 2016 2015 (billions of dollars) Crude oil Petroleum products Chemical products Gas/other Total 3.9 3.7 2.8 0.5 10.9 4.2 4.1 2.7 1.0 12.0