XYZ Inc. CONSOLIDATED FINANCIAL STATEMENTS XYZ Inc. Consolidated Financial Position at June 30 (Dollars in millions)...

 

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XYZ Inc. CONSOLIDATED FINANCIAL STATEMENTS XYZ Inc. Consolidated Financial Position at June 30 (Dollars in millions) 2019 2018 Assets Current assets: Cash and short-term investments 1,122 8,249 7,503 816 583 7,204 25,477 2$ 530 Receivables - trade and other 8,607 6,804 733 Receivables - finance Deferred and refundable income taxes Prepaid expenses and other current assets Inventories 638 6,351 23,663 Total current assets Property, plant and equipment - net Long-term receivables - trade and other Long-term receivables - finance Investments in unconsolidated affiliated companies Noncurrent deferred and refundable income taxes 9,997 685 13,462 598 8,851 860 11,531 562 1,949 Intangible assets Goodwill Other assets 1,553 475 1,963 387 1,922 $ 56,132 1,904 1,742 $ Total assets 51,449 Liabilities Current liabilities: Short-term borrowings: $ $ 165 4,990 4,085 2,923 187 Machinery and Engines Financial Products Accounts payable Accrued expenses Accrued wages, salaries and employee benefits Customer advances 5,281 4,723 3,178 1,126 1,442 225 938 921 Dividends payable Other current liabilities 194 951 1,145 Long-term debt due within one year: Machinery and Engines Financial Products 180 418 4,043 4,952 22,245 Total current liabilities 19,822 Long-term debt due after one year: Machinery and Engines Financial Products 3,639 14,190 5,059 2,116 47,249 3,694 13,986 5,879 1,209 Liability for postemployment benefits Other liabilities Total liabilities 44,590 Stockholders' equity Common stock of $1.00 par: Authorized shares: 900,000,000 2,744 Issued shares: (2019 and 2018 - 814,894,624) at paid-in amount Treasury stock (2019 – 190,908,490 shares; 2018 – 169,086,448 shares) at cost Retained earnings Accumulated other comprehensive income Total stockholders' equity Total liabilities and stockholders' equity 2,465 (9,451) 17,398 (1,808) 8,883 $ (7,352) 14,593 (2,847) 6,859 56,132 $ 51,449 XYZ Inc. Consolidated Results of Operations for the Years Ended June 30 (Dollars in millions except per share data) 2019 2018 2017 Sales and revenues: $ 38,869 2,648 41,517 2$ Sales of Machinery and Engines Revenues of Financial Products Total sales and revenues 41,962 2,996 44,958 $ 34,006 2,333 36,339 Operating costs: 29,549 3,706 26,558 Cost of goods sold Selling, general and administrative expenses Research and development expenses Interest expense of Financial Products Other operating expenses Total operating costs 32,626 3,821 1,404 1,132 1,054 40,037 3,190 1,084 768 955 1,347 1,023 971 36,596 32,555 Operating Income 4,921 4,921 3,784 Interest expense excluding Financial Products Other income (expense) 288 274 260 320 214 377 Income from continuing operations before taxes 4,953 4,861 3,901 Provision for income taxes 1,485 1,405 1,120 Income from continuing operations 3,468 3,456 2,781 Equity in profit (loss) of unconsolidated affiliated companies 73 81 73 Net Income $ 3,541 $ 3,537 $ 2,854 Net Income per common share 2$ 5.55 24 5.37 24 4.21 Net Income common share - diluted $ 5.37 $ 5.17 4.04 Weighted-average common shares outstanding (millions) Basic 678.4 638.2 659.5 658.7 - Diluted 683.8 705.8 Inventories Inventories are stated at the lower of cost or market. Cost is principally determined using the last- in, first-out (LIFO) method. If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,100 million and $2,400 million higher than reported at June 30, 2019, and June 30, 2018, respectively. ... Question 3. Refer to excerpts from XYZ' financial statements above. Assume prices (i.e., inventory costs) are increasing and the tax rate is 35%. a) What is XYZ's cumulative tax savings as of June 30, 2019 from using LIFO instead of FIFO? (Note: Tax savings should be a positive number.) (2 points) $ 0 million b) What would XYZ's cost of goods sold be for 2019 if the company had used FIFO instead of LIFO? (2 points) $ 0 million c) Would XYZ's 2019 net income be higher or lower if the company had used FIFO instead of LIFO? By how much? (3 points) • by $ 0 million d) What would XYZ's retained earnings be as of June 30, 2019 if the company had used FIFO instead of LIFO? (2 points) $ 0 million XYZ Inc. CONSOLIDATED FINANCIAL STATEMENTS XYZ Inc. Consolidated Financial Position at June 30 (Dollars in millions) 2019 2018 Assets Current assets: Cash and short-term investments 1,122 8,249 7,503 816 583 7,204 25,477 2$ 530 Receivables - trade and other 8,607 6,804 733 Receivables - finance Deferred and refundable income taxes Prepaid expenses and other current assets Inventories 638 6,351 23,663 Total current assets Property, plant and equipment - net Long-term receivables - trade and other Long-term receivables - finance Investments in unconsolidated affiliated companies Noncurrent deferred and refundable income taxes 9,997 685 13,462 598 8,851 860 11,531 562 1,949 Intangible assets Goodwill Other assets 1,553 475 1,963 387 1,922 $ 56,132 1,904 1,742 $ Total assets 51,449 Liabilities Current liabilities: Short-term borrowings: $ $ 165 4,990 4,085 2,923 187 Machinery and Engines Financial Products Accounts payable Accrued expenses Accrued wages, salaries and employee benefits Customer advances 5,281 4,723 3,178 1,126 1,442 225 938 921 Dividends payable Other current liabilities 194 951 1,145 Long-term debt due within one year: Machinery and Engines Financial Products 180 418 4,043 4,952 22,245 Total current liabilities 19,822 Long-term debt due after one year: Machinery and Engines Financial Products 3,639 14,190 5,059 2,116 47,249 3,694 13,986 5,879 1,209 Liability for postemployment benefits Other liabilities Total liabilities 44,590 Stockholders' equity Common stock of $1.00 par: Authorized shares: 900,000,000 2,744 Issued shares: (2019 and 2018 - 814,894,624) at paid-in amount Treasury stock (2019 – 190,908,490 shares; 2018 – 169,086,448 shares) at cost Retained earnings Accumulated other comprehensive income Total stockholders' equity Total liabilities and stockholders' equity 2,465 (9,451) 17,398 (1,808) 8,883 $ (7,352) 14,593 (2,847) 6,859 56,132 $ 51,449 XYZ Inc. Consolidated Results of Operations for the Years Ended June 30 (Dollars in millions except per share data) 2019 2018 2017 Sales and revenues: $ 38,869 2,648 41,517 2$ Sales of Machinery and Engines Revenues of Financial Products Total sales and revenues 41,962 2,996 44,958 $ 34,006 2,333 36,339 Operating costs: 29,549 3,706 26,558 Cost of goods sold Selling, general and administrative expenses Research and development expenses Interest expense of Financial Products Other operating expenses Total operating costs 32,626 3,821 1,404 1,132 1,054 40,037 3,190 1,084 768 955 1,347 1,023 971 36,596 32,555 Operating Income 4,921 4,921 3,784 Interest expense excluding Financial Products Other income (expense) 288 274 260 320 214 377 Income from continuing operations before taxes 4,953 4,861 3,901 Provision for income taxes 1,485 1,405 1,120 Income from continuing operations 3,468 3,456 2,781 Equity in profit (loss) of unconsolidated affiliated companies 73 81 73 Net Income $ 3,541 $ 3,537 $ 2,854 Net Income per common share 2$ 5.55 24 5.37 24 4.21 Net Income common share - diluted $ 5.37 $ 5.17 4.04 Weighted-average common shares outstanding (millions) Basic 678.4 638.2 659.5 658.7 - Diluted 683.8 705.8 Inventories Inventories are stated at the lower of cost or market. Cost is principally determined using the last- in, first-out (LIFO) method. If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,100 million and $2,400 million higher than reported at June 30, 2019, and June 30, 2018, respectively. ... Question 3. Refer to excerpts from XYZ' financial statements above. Assume prices (i.e., inventory costs) are increasing and the tax rate is 35%. a) What is XYZ's cumulative tax savings as of June 30, 2019 from using LIFO instead of FIFO? (Note: Tax savings should be a positive number.) (2 points) $ 0 million b) What would XYZ's cost of goods sold be for 2019 if the company had used FIFO instead of LIFO? (2 points) $ 0 million c) Would XYZ's 2019 net income be higher or lower if the company had used FIFO instead of LIFO? By how much? (3 points) • by $ 0 million d) What would XYZ's retained earnings be as of June 30, 2019 if the company had used FIFO instead of LIFO? (2 points) $ 0 million

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