Eli Lilly & Co. (LLY)

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)

Eli Lilly & Co., Statement of Financial Position, Inventory

USD $ in thousands

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Finished products
	Work in process
	Raw materials and supplies
	Inventories, approximates replacement cost
	Increase (reduction) to LIFO cost
	Inventories

Source: Based on data from Eli Lilly & Co. Annual Reports

Item	Description	The company
Finished products	Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale.	Eli Lilly & Co.'s finished products declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Work in process	Carrying amount as of the balance sheet date of merchandise or goods which are partially completed, are generally comprised of raw materials, labor and factory overhead costs, and which require further materials, labor and overhead to be converted into finished goods, and which generally require the use of estimates to determine percentage complete and pricing.	Eli Lilly & Co.'s work in process increased from 2015 to 2016 and from 2016 to 2017.
Raw materials and supplies	Aggregated amount of unprocessed materials to be used in manufacturing or production process and supplies that will be consumed.	Eli Lilly & Co.'s raw materials and supplies increased from 2015 to 2016 and from 2016 to 2017.
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).	Eli Lilly & Co.'s inventories increased from 2015 to 2016 and from 2016 to 2017.

Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in thousands

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Adjustment to Inventories
	Inventories at LIFO (as reported)
	Add: Inventory LIFO reserve
	Inventories at FIFO (adjusted)
	Adjustment to Current Assets
	Current assets (as reported)
	Add: Inventory LIFO reserve
	Current assets (adjusted)
	Adjustment to Total Assets
	Total assets (as reported)
	Add: Inventory LIFO reserve
	Total assets (adjusted)
	Adjustment to Total Eli Lilly And Company Shareholders' Equity
	Total Eli Lilly and Company shareholders' equity (as reported)
	Add: Inventory LIFO reserve
	Total Eli Lilly and Company shareholders' equity (adjusted)
	Adjustment to Net Income (loss)
	Net income (loss) (as reported)
	Add: Increase (decrease) in inventory LIFO reserve
	Net income (loss) (adjusted)

Eli Lilly & Co.'s inventory value on Dec 31, 2017 would be $4,397,900 (in thousands) if the FIFO inventory method was used instead of LIFO. Eli Lilly & Co.'s inventories, valued on a LIFO basis, on Dec 31, 2017 were $4,458,300 . Eli Lilly & Co.'s inventories would have been $(60,400) higher than reported on Dec 31, 2017 if the FIFO method had been used instead.

Eli Lilly & Co., adjusted ratios

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
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.	Eli Lilly & Co.'s adjusted current ratio deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Eli Lilly & Co.'s adjusted net profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Eli Lilly & Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
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.	Eli Lilly & Co.'s adjusted financial leverage increased from 2015 to 2016 and from 2016 to 2017.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	Eli Lilly & Co.'s adjusted ROE improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Eli Lilly & Co.'s adjusted ROA improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Current assets (USD $ in thousands)
	Current liabilities (USD $ in thousands)

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

	Adjusted current ratio²

2017 Calculations

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

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

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Eli Lilly & Co.'s adjusted current ratio deteriorated from 2015 to 2016 and from 2016 to 2017.

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Net income (loss) (USD $ in thousands)
Revenue (USD $ in thousands)

Net profit margin¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net income (loss) (USD $ in thousands)
Revenue (USD $ in thousands)

Adjusted net profit margin²	%	%	%	%	%

2017 Calculations

¹ Net profit margin = 100 × Net income (loss) ÷ Revenue
= 100 × hidden ÷ hidden = hidden %

² Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Revenue
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Eli Lilly & Co.'s adjusted net profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Revenue (USD $ in thousands)
	Total assets (USD $ in thousands)

	Total asset turnover¹
	Adjusted: from LIFO to FIFO
	Revenue (USD $ in thousands)
	Adjusted total assets (USD $ in thousands)

	Adjusted total asset turnover²

2017 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= hidden ÷ hidden = hidden

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= hidden ÷ hidden = hidden

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Eli Lilly & Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	As Reported
	Total assets (USD $ in thousands)
	Total Eli Lilly and Company shareholders' equity (USD $ in thousands)

	Financial leverage¹
	Adjusted: from LIFO to FIFO
	Adjusted total assets (USD $ in thousands)
	Adjusted total Eli Lilly and Company shareholders' equity (USD $ in thousands)

	Adjusted financial leverage²

2017 Calculations

¹ Financial leverage = Total assets ÷ Total Eli Lilly and Company shareholders' equity
= hidden ÷ hidden = hidden

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Eli Lilly and Company shareholders' equity
= hidden ÷ hidden = hidden

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.	Eli Lilly & Co.'s adjusted financial leverage increased from 2015 to 2016 and from 2016 to 2017.

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Net income (loss) (USD $ in thousands)
Total Eli Lilly and Company shareholders' equity (USD $ in thousands)

ROE¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net income (loss) (USD $ in thousands)
Adjusted total Eli Lilly and Company shareholders' equity (USD $ in thousands)

Adjusted ROE²	%	%	%	%	%

2017 Calculations

¹ ROE = 100 × Net income (loss) ÷ Total Eli Lilly and Company shareholders' equity
= 100 × hidden ÷ hidden = hidden %

² Adjusted ROE = 100 × Adjusted net income (loss) ÷ Adjusted total Eli Lilly and Company shareholders' equity
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	Eli Lilly & Co.'s adjusted ROE improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Net income (loss) (USD $ in thousands)
Total assets (USD $ in thousands)

ROA¹	%	%	%	%	%
Adjusted: from LIFO to FIFO
Adjusted net income (loss) (USD $ in thousands)
Adjusted total assets (USD $ in thousands)

Adjusted ROA²	%	%	%	%	%

2017 Calculations

¹ ROA = 100 × Net income (loss) ÷ Total assets
= 100 × hidden ÷ hidden = hidden %

² Adjusted ROA = 100 × Adjusted net income (loss) ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Eli Lilly & Co.'s adjusted ROA improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

	Eli Lilly & Co.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

Eli Lilly & Co. (LLY)

Analysis of Inventory

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)