Occidental Petroleum Corp. (OXY)

Inventory Accounting Policy

Materials and supplies are valued at the lower of weighted-average cost or market and are reviewed periodically for obsolescence. Oil, NGLs and natural gas inventories are valued at the lower of cost or market.

For the chemical segment, Occidental's inventories are valued at the lower of cost or market. For most of its domestic inventories, other than materials and supplies, the chemical segment uses the last-in, first-out (LIFO) method as it better matches current costs and current revenue. For other countries, Occidental uses the first-in, first-out method (if the costs of goods are specifically identifiable) or the average-cost method (if the costs of goods are not specifically identifiable).

Source: Occidental Petroleum Corp., Annual Report

Inventory Disclosure

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Occidental Petroleum Corp., Statement of Financial Position, Inventory

USD $ in millions

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Raw materials
	Materials and supplies
	Finished goods
	Inventories, at FIFO
	LIFO reserve
	Inventories

Source: Based on data from Occidental Petroleum Corp. Annual Reports

Item	Description	The company
Raw materials	Carrying amount as of the balance sheet date of unprocessed items to be consumed in the manufacturing or production process. Also includes purchased parts that will be used as components of a finished product.
Materials and supplies	Carrying amount as of the balance sheet date of products used directly or indirectly in the manufacturing or production process, which may or may not become part of the final product. May also include items used in the storage, presentation or transportation of physical goods.	Occidental Petroleum Corp.'s materials and supplies declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
Finished goods	Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale.	Occidental Petroleum Corp.'s finished goods increased from 2009 to 2010 and from 2010 to 2011.
Inventories	Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer).	Occidental Petroleum Corp.'s inventories declined from 2009 to 2010 but then increased from 2010 to 2011 not reaching 2009 level.

Adjustment to Inventory: from LIFO to FIFO

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Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Adjustment to Inventories
	Inventories at LIFO (as reported)
	Add: LIFO reserve, ending balance
	Inventories at FIFO (adjusted)
	Adjustment to Current Assets
	Current assets (as reported)
	Add: LIFO reserve, ending balance
	Current assets (adjusted)
	Adjustment to Total Assets
	Total assets (as reported)
	Add: LIFO reserve, ending balance
	Total assets (adjusted)
	Adjustment to Equity Attributable To Common Stock
	Equity attributable to common stock (as reported)
	Add: LIFO reserve, ending balance
	Equity attributable to common stock (adjusted)
	Adjustment to Net Income Attributable To Common Stock
	Net income attributable to common stock (as reported)
	Add: Increase (decrease) in LIFO reserve, ending balance
	Net income attributable to common stock (adjusted)

Occidental Petroleum Corp.'s inventory value on Dec 31, 2011 would be $1,167 (in millions) if the FIFO inventory method was used instead of LIFO. Occidental Petroleum Corp.'s inventories, valued on a LIFO basis, on Dec 31, 2011 were $1,069 . Occidental Petroleum Corp.'s inventories would have been $98 higher than reported on Dec 31, 2011 if the FIFO method had been used instead.

Adjusted Ratios: LIFO vs. FIFO (Summary)

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Occidental Petroleum Corp., adjusted ratios

	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
Current Ratio
Reported current ratio (LIFO)
Adjusted current ratio (FIFO)
Net Profit Margin
Reported net profit margin (LIFO)	%	%	%	%	%
Adjusted net profit margin (FIFO)	%	%	%	%	%
Total Asset Turnover
Reported total asset turnover (LIFO)
Adjusted total asset turnover (FIFO)
Financial Leverage
Reported financial leverage (LIFO)
Adjusted financial leverage (FIFO)
Return on Equity (ROE)
Reported ROE (LIFO)	%	%	%	%	%
Adjusted ROE (FIFO)	%	%	%	%	%
Return on Assets (ROA)
Reported ROA (LIFO)	%	%	%	%	%
Adjusted ROA (FIFO)	%	%	%	%	%

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Occidental Petroleum Corp.'s adjusted current ratio improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011 not reaching 2009 level.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Occidental Petroleum Corp.'s adjusted net profit margin improved from 2009 to 2010 and from 2010 to 2011.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Occidental Petroleum Corp.'s adjusted total asset turnover improved from 2009 to 2010 and from 2010 to 2011.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Occidental Petroleum Corp.'s adjusted financial leverage increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	Occidental Petroleum Corp.'s adjusted ROE improved from 2009 to 2010 and from 2010 to 2011.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Occidental Petroleum Corp.'s adjusted ROA improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Current Ratio

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		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Current assets (USD $ in millions)
	Current liabilities (USD $ in millions)

	Current ratio¹
	Adjusted: from LIFO to FIFO
	Adjusted current assets (USD $ in millions)
	Current liabilities (USD $ in millions)

	Adjusted current ratio²

2011 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= ÷ =

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Occidental Petroleum Corp.'s adjusted current ratio improved from 2009 to 2010 but then slightly deteriorated from 2010 to 2011 not reaching 2009 level.

Adjusted Net Profit Margin

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	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
As Reported
Net income attributable to common stock (USD $ in millions)
Net sales (USD $ in millions)

Net profit margin¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net income attributable to common stock (USD $ in millions)
Net sales (USD $ in millions)

Adjusted net profit margin²	%	%	%	%	%

2011 Calculations

¹ Net profit margin = 100 × Net income attributable to common stock ÷ Net sales
= 100 × ÷ = %

² Adjusted net profit margin = 100 × Adjusted net income attributable to common stock ÷ Net sales
= 100 × ÷ = %

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Occidental Petroleum Corp.'s adjusted net profit margin improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Total Asset Turnover

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		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Net sales (USD $ in millions)
	Total assets (USD $ in millions)

	Total asset turnover¹
	Adjusted: from LIFO to FIFO
	Net sales (USD $ in millions)
	Adjusted total assets (USD $ in millions)

	Adjusted total asset turnover²

2011 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= ÷ =

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Occidental Petroleum Corp.'s adjusted total asset turnover improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Financial Leverage

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		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Total assets (USD $ in millions)
	Equity attributable to common stock (USD $ in millions)

	Financial leverage¹
	Adjusted: from LIFO to FIFO
	Adjusted total assets (USD $ in millions)
	Adjusted equity attributable to common stock (USD $ in millions)

	Adjusted financial leverage²

2011 Calculations

¹ Financial leverage = Total assets ÷ Equity attributable to common stock
= ÷ =

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to common stock
= ÷ =

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Occidental Petroleum Corp.'s adjusted financial leverage increased from 2009 to 2010 but then slightly declined from 2010 to 2011.

Adjusted Return On Equity (ROE)

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	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
As Reported
Net income attributable to common stock (USD $ in millions)
Equity attributable to common stock (USD $ in millions)

ROE¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net income attributable to common stock (USD $ in millions)
Adjusted equity attributable to common stock (USD $ in millions)

Adjusted ROE²	%	%	%	%	%

2011 Calculations

¹ ROE = 100 × Net income attributable to common stock ÷ Equity attributable to common stock
= 100 × ÷ = %

² Adjusted ROE = 100 × Adjusted net income attributable to common stock ÷ Adjusted equity attributable to common stock
= 100 × ÷ = %

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	Occidental Petroleum Corp.'s adjusted ROE improved from 2009 to 2010 and from 2010 to 2011.

Adjusted Return On Assets (ROA)

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	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
As Reported
Net income attributable to common stock (USD $ in millions)
Total assets (USD $ in millions)

ROA¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net income attributable to common stock (USD $ in millions)
Adjusted total assets (USD $ in millions)

Adjusted ROA²	%	%	%	%	%

2011 Calculations

¹ ROA = 100 × Net income attributable to common stock ÷ Total assets
= 100 × ÷ = %

² Adjusted ROA = 100 × Adjusted net income attributable to common stock ÷ Adjusted total assets
= 100 × ÷ = %

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Occidental Petroleum Corp.'s adjusted ROA improved from 2009 to 2010 and from 2010 to 2011.

Occidental Petroleum Corp. (OXY) | Analysis of Inventory

Inventory Accounting Policy

Inventory Disclosure

Adjustment to Inventory: from LIFO to FIFO

Adjusted Ratios: LIFO vs. FIFO (Summary)

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return On Equity (ROE)

Adjusted Return On Assets (ROA)

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