Microsoft Excel LibreOffice Calc

Occidental Petroleum Corp. (OXY)


Analysis of Inventory

Difficulty: Advanced


Inventory Accounting Policy

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

For the chemical segment, Occidental’s finished goods 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: 10-K (filing date: 2019-02-21).


Inventory Disclosure

Occidental Petroleum Corp., Statement of Financial Position, Inventory

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Raw materials 74  66  65  73  71 
Materials and supplies 445  447  446  568  585 
Finished goods 788  776  395  395  485 
Inventories, at FIFO 1,307  1,289  906  1,036  1,141 
Revaluation to LIFO (47) (43) (40) (50) (89)
Inventories 1,260  1,246  866  986  1,052 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

Item Description The company
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Occidental Petroleum Corp.’s inventories increased from 2016 to 2017 and from 2017 to 2018.

Adjustment to Inventory: from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Adjustment to Inventories
Inventories at LIFO (as reported) 1,260  1,246  866  986  1,052 
Add: Inventory LIFO reserve 47  43  40  50  89 
Inventories at FIFO (adjusted) 1,307  1,289  906  1,036  1,141 
Adjustment to Current Assets
Current assets (as reported) 9,932  8,270  8,428  9,402  13,873 
Add: Inventory LIFO reserve 47  43  40  50  89 
Current assets (adjusted) 9,979  8,313  8,468  9,452  13,962 
Adjustment to Total Assets
Total assets (as reported) 43,854  42,026  43,109  43,437  56,259 
Add: Inventory LIFO reserve 47  43  40  50  89 
Total assets (adjusted) 43,901  42,069  43,149  43,487  56,348 
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 21,330  20,572  21,497  24,350  34,959 
Add: Inventory LIFO reserve 47  43  40  50  89 
Stockholders’ equity (adjusted) 21,377  20,615  21,537  24,400  35,048 
Adjustment to Net Income (loss) Attributable To Common Stock
Net income (loss) attributable to common stock (as reported) 4,131  1,311  (574) (7,829) 616 
Add: Increase (decrease) in inventory LIFO reserve (10) (39) (2)
Net income (loss) attributable to common stock (adjusted) 4,135  1,314  (584) (7,868) 614 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

Occidental Petroleum Corp.’s inventory value on Dec 31, 2018 would be $1,307  (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, 2018 were $1,260 . Occidental Petroleum Corp.’s inventories would have been $47  higher than reported on Dec 31, 2018 if the FIFO method had been used instead.


Occidental Petroleum Corp., Financial Data: Reported vs. Adjusted


Adjusted Ratios: LIFO vs. FIFO (Summary)

Occidental Petroleum Corp., adjusted ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Current Ratio
Reported current ratio (LIFO) 1.34 1.12 1.32 1.37 1.68
Adjusted current ratio (FIFO) 1.35 1.12 1.33 1.38 1.69
Net Profit Margin
Reported net profit margin (LIFO) 23.18% 10.48% -5.69% -62.73% 3.19%
Adjusted net profit margin (FIFO) 23.20% 10.51% -5.79% -63.04% 3.18%
Total Asset Turnover
Reported total asset turnover (LIFO) 0.41 0.30 0.23 0.29 0.34
Adjusted total asset turnover (FIFO) 0.41 0.30 0.23 0.29 0.34
Financial Leverage
Reported financial leverage (LIFO) 2.06 2.04 2.01 1.78 1.61
Adjusted financial leverage (FIFO) 2.05 2.04 2.00 1.78 1.61
Return on Equity (ROE)
Reported ROE (LIFO) 19.37% 6.37% -2.67% -32.15% 1.76%
Adjusted ROE (FIFO) 19.34% 6.37% -2.71% -32.25% 1.75%
Return on Assets (ROA)
Reported ROA (LIFO) 9.42% 3.12% -1.33% -18.02% 1.09%
Adjusted ROA (FIFO) 9.42% 3.12% -1.35% -18.09% 1.09%

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 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 2016 to 2017 and from 2017 to 2018.
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 2016 to 2017 and from 2017 to 2018.
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 2016 to 2017 and from 2017 to 2018.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Occidental Petroleum Corp.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Occidental Petroleum Corp.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.

Occidental Petroleum Corp., Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Current assets 9,932  8,270  8,428  9,402  13,873 
Current liabilities 7,412  7,400  6,362  6,842  8,244 
Ratio
Current ratio1 1.34 1.12 1.32 1.37 1.68
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted current assets 9,979  8,313  8,468  9,452  13,962 
Current liabilities 7,412  7,400  6,362  6,842  8,244 
Ratio
Adjusted current ratio2 1.35 1.12 1.33 1.38 1.69

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

2018 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 9,932 ÷ 7,412 = 1.34

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 9,979 ÷ 7,412 = 1.35

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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net income (loss) attributable to common stock 4,131  1,311  (574) (7,829) 616 
Net sales 17,824  12,508  10,090  12,480  19,312 
Ratio
Net profit margin1 23.18% 10.48% -5.69% -62.73% 3.19%
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income (loss) attributable to common stock 4,135  1,314  (584) (7,868) 614 
Net sales 17,824  12,508  10,090  12,480  19,312 
Ratio
Adjusted net profit margin2 23.20% 10.51% -5.79% -63.04% 3.18%

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

2018 Calculations

1 Net profit margin = 100 × Net income (loss) attributable to common stock ÷ Net sales
= 100 × 4,131 ÷ 17,824 = 23.18%

2 Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to common stock ÷ Net sales
= 100 × 4,135 ÷ 17,824 = 23.20%

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 2016 to 2017 and from 2017 to 2018.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net sales 17,824  12,508  10,090  12,480  19,312 
Total assets 43,854  42,026  43,109  43,437  56,259 
Ratio
Total asset turnover1 0.41 0.30 0.23 0.29 0.34
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Net sales 17,824  12,508  10,090  12,480  19,312 
Adjusted total assets 43,901  42,069  43,149  43,487  56,348 
Ratio
Adjusted total asset turnover2 0.41 0.30 0.23 0.29 0.34

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

2018 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 17,824 ÷ 43,854 = 0.41

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 17,824 ÷ 43,901 = 0.41

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 2016 to 2017 and from 2017 to 2018.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Total assets 43,854  42,026  43,109  43,437  56,259 
Stockholders’ equity 21,330  20,572  21,497  24,350  34,959 
Ratio
Financial leverage1 2.06 2.04 2.01 1.78 1.61
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted total assets 43,901  42,069  43,149  43,487  56,348 
Adjusted stockholders’ equity 21,377  20,615  21,537  24,400  35,048 
Ratio
Adjusted financial leverage2 2.05 2.04 2.00 1.78 1.61

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

2018 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 43,854 ÷ 21,330 = 2.06

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 43,901 ÷ 21,377 = 2.05

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 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net income (loss) attributable to common stock 4,131  1,311  (574) (7,829) 616 
Stockholders’ equity 21,330  20,572  21,497  24,350  34,959 
Ratio
ROE1 19.37% 6.37% -2.67% -32.15% 1.76%
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income (loss) attributable to common stock 4,135  1,314  (584) (7,868) 614 
Adjusted stockholders’ equity 21,377  20,615  21,537  24,400  35,048 
Ratio
Adjusted ROE2 19.34% 6.37% -2.71% -32.25% 1.75%

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

2018 Calculations

1 ROE = 100 × Net income (loss) attributable to common stock ÷ Stockholders’ equity
= 100 × 4,131 ÷ 21,330 = 19.37%

2 Adjusted ROE = 100 × Adjusted net income (loss) attributable to common stock ÷ Adjusted stockholders’ equity
= 100 × 4,135 ÷ 21,377 = 19.34%

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 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net income (loss) attributable to common stock 4,131  1,311  (574) (7,829) 616 
Total assets 43,854  42,026  43,109  43,437  56,259 
Ratio
ROA1 9.42% 3.12% -1.33% -18.02% 1.09%
Adjusted: from LIFO to FIFO
Selected Financial Data (USD $ in millions)
Adjusted net income (loss) attributable to common stock 4,135  1,314  (584) (7,868) 614 
Adjusted total assets 43,901  42,069  43,149  43,487  56,348 
Ratio
Adjusted ROA2 9.42% 3.12% -1.35% -18.09% 1.09%

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-23).

2018 Calculations

1 ROA = 100 × Net income (loss) attributable to common stock ÷ Total assets
= 100 × 4,131 ÷ 43,854 = 9.42%

2 Adjusted ROA = 100 × Adjusted net income (loss) attributable to common stock ÷ Adjusted total assets
= 100 × 4,135 ÷ 43,901 = 9.42%

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 2016 to 2017 and from 2017 to 2018.