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Microsoft Excel LibreOffice Calc

Monsanto Co. (MON)


Analysis of Inventory

Difficulty: Advanced


Inventory Accounting Policy

Inventories are stated at the lower of cost or market value for inventory measured using last-in, first-out ("LIFO") method. Inventories are stated at the lower of cost or net realizable value for inventory measured under the first-in, first-out ("FIFO") or average cost method. An inventory reserve would permanently reduce the cost basis of inventory. Inventories are valued as follows:

  • Seeds and Genomics: Actual cost is used to value raw materials such as treatment chemicals and packaging, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at weighted-average actual cost. Weighted-average actual cost includes field growing and harvesting costs, plant conditioning and packaging costs and manufacturing overhead costs.
  • Agricultural Productivity: Actual cost is used to value raw materials and supplies. Standard cost, which approximates actual cost, is used to value finished goods and goods in process. Variances, exclusive of abnormally low volume and operating performance, are capitalized into inventory. Standard cost includes direct labor and raw materials and manufacturing overhead based on normal capacity. The cost of the Agricultural Productivity segment inventories in the United States (approximately 17 and 11 percent of total company inventory as of Aug. 31, 2017, and Aug. 31, 2016) is determined by using the LIFO method, which generally reflects the effects of inflation or deflation on cost of goods sold sooner than other inventory cost methods. The cost of inventories outside of the United States, as well as supplies inventories in the United States, is determined by using the FIFO method; FIFO is used outside of the United States because the requirements in the countries where Monsanto maintains inventories generally do not allow the use of the LIFO method. Inventories at FIFO approximate current cost.

In accordance with the Inventory topic of the ASC, Monsanto records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of conversion based on the normal capacity of the production facilities.

Monsanto establishes allowances for obsolescence of inventory equal to the difference between the cost of inventory (if higher) and the estimated market value, based on assumptions about future demand and market conditions. Monsanto regularly evaluates the adequacy of its inventory obsolescence reserves. If economic and market conditions are different from those anticipated, inventory obsolescence could be materially different from the amounts provided for in Monsanto’s consolidated financial statements.

Source: 10-K (filing date: 2017-10-27).


Inventory Disclosure

Monsanto Co., Statement of Financial Position, Inventory

USD $ in millions

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Finished goods hidden hidden hidden hidden hidden hidden
Goods in process hidden hidden hidden hidden hidden hidden
Raw materials and supplies hidden hidden hidden hidden hidden hidden
Inventory at FIFO cost hidden hidden hidden hidden hidden hidden
Excess of FIFO over LIFO cost hidden hidden hidden hidden hidden hidden
Inventory, net hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

Item Description The company
Inventory, net Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Monsanto Co.’s inventory, net declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

Adjustment to Inventory: from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Adjustment to Inventory, Net
Inventory, net at LIFO (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Inventory, net at FIFO (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Current Assets
Current assets (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Current assets (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Total Assets
Total assets (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Total assets (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Total Monsanto Company Shareowners’ Equity
Total Monsanto Company shareowners’ equity (as reported) hidden hidden hidden hidden hidden hidden
Add: Inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Total Monsanto Company shareowners’ equity (adjusted) hidden hidden hidden hidden hidden hidden
Adjustment to Net Income Attributable To Monsanto Company
Net income attributable to Monsanto Company (as reported) hidden hidden hidden hidden hidden hidden
Add: Increase (decrease) in inventory LIFO reserve hidden hidden hidden hidden hidden hidden
Net income attributable to Monsanto Company (adjusted) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

Monsanto Co.’s inventory value on Aug 31, 2017 would be $3,484  (in millions) if the FIFO inventory method was used instead of LIFO. Monsanto Co.’s inventories, valued on a LIFO basis, on Aug 31, 2017 were $3,340 . Monsanto Co.’s inventories would have been $144  higher than reported on Aug 31, 2017 if the FIFO method had been used instead.


Monsanto Co., Financial Data: Reported vs. Adjusted


Adjusted Ratios: LIFO vs. FIFO (Summary)

Monsanto Co., adjusted ratios

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Current Ratio
Reported current ratio (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted current ratio (FIFO) hidden hidden hidden hidden hidden hidden
Net Profit Margin
Reported net profit margin (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted net profit margin (FIFO) hidden hidden hidden hidden hidden hidden
Total Asset Turnover
Reported total asset turnover (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted total asset turnover (FIFO) hidden hidden hidden hidden hidden hidden
Financial Leverage
Reported financial leverage (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted financial leverage (FIFO) hidden hidden hidden hidden hidden hidden
Return on Equity (ROE)
Reported ROE (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted ROE (FIFO) hidden hidden hidden hidden hidden hidden
Return on Assets (ROA)
Reported ROA (LIFO) hidden hidden hidden hidden hidden hidden
Adjusted ROA (FIFO) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Monsanto Co.’s adjusted current ratio deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Monsanto Co.’s adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Monsanto Co.’s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
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.
Monsanto Co.’s adjusted financial leverage increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Monsanto Co.’s adjusted ROE deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Monsanto Co.’s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Monsanto Co., Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Selected Financial Data (USD $ in millions)
Current assets hidden hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden hidden
Ratio
Current ratio1 hidden hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted current assets hidden hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden hidden
Ratio
Adjusted current ratio2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

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. Monsanto Co.’s adjusted current ratio deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Monsanto Company hidden hidden hidden hidden hidden hidden
Net sales hidden hidden hidden hidden hidden hidden
Ratio
Net profit margin1 hidden hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Monsanto Company hidden hidden hidden hidden hidden hidden
Net sales hidden hidden hidden hidden hidden hidden
Ratio
Adjusted net profit margin2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

2017 Calculations

1 Net profit margin = 100 × Net income attributable to Monsanto Company ÷ Net sales
= 100 × hidden ÷ hidden = hidden

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Monsanto Company ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Monsanto Co.’s adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Selected Financial Data (USD $ in millions)
Net sales hidden hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden hidden
Ratio
Total asset turnover1 hidden hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Net sales hidden hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden hidden
Ratio
Adjusted total asset turnover2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

2017 Calculations

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

2 Adjusted total asset turnover = Net sales ÷ 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. Monsanto Co.’s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Selected Financial Data (USD $ in millions)
Total assets hidden hidden hidden hidden hidden hidden
Total Monsanto Company shareowners’ equity hidden hidden hidden hidden hidden hidden
Ratio
Financial leverage1 hidden hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted total assets hidden hidden hidden hidden hidden hidden
Adjusted total Monsanto Company shareowners’ equity hidden hidden hidden hidden hidden hidden
Ratio
Adjusted financial leverage2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

2017 Calculations

1 Financial leverage = Total assets ÷ Total Monsanto Company shareowners’ equity
= hidden ÷ hidden = hidden

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Monsanto Company shareowners’ 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.
Monsanto Co.’s adjusted financial leverage increased from 2015 to 2016 but then slightly declined from 2016 to 2017 not reaching 2015 level.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Monsanto Company hidden hidden hidden hidden hidden hidden
Total Monsanto Company shareowners’ equity hidden hidden hidden hidden hidden hidden
Ratio
ROE1 hidden hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Monsanto Company hidden hidden hidden hidden hidden hidden
Adjusted total Monsanto Company shareowners’ equity hidden hidden hidden hidden hidden hidden
Ratio
Adjusted ROE2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

2017 Calculations

1 ROE = 100 × Net income attributable to Monsanto Company ÷ Total Monsanto Company shareowners’ equity
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROE = 100 × Adjusted net income attributable to Monsanto Company ÷ Adjusted total Monsanto Company shareowners’ equity
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Monsanto Co.’s adjusted ROE deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Monsanto Company hidden hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden hidden
Ratio
ROA1 hidden hidden hidden hidden hidden hidden
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Monsanto Company hidden hidden hidden hidden hidden hidden
Adjusted total assets hidden hidden hidden hidden hidden hidden
Ratio
Adjusted ROA2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2017-10-27), 10-K (filing date: 2016-10-19), 10-K (filing date: 2015-10-29), 10-K (filing date: 2014-10-29), 10-K (filing date: 2013-10-23), 10-K (filing date: 2012-10-19).

2017 Calculations

1 ROA = 100 × Net income attributable to Monsanto Company ÷ Total assets
= 100 × hidden ÷ hidden = hidden

2 Adjusted ROA = 100 × Adjusted net income attributable to Monsanto Company ÷ 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. Monsanto Co.’s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.