1) Inventory Measurement: FIFO & LIFO

i.
The following are found on page 20, 125 and 129 respectively on the
annual report

ii.

iii.

Compared to US GAAP, IFRS does not permit the use of LIFO for inventory.
Since this is the case historically earnings would be lower if commodity
prices are going up consistently and vice versa if they go down. Shell
reports current cost of supplies (CSS) and FIFO earnings for each segment
of operations. Due to the nature of CSS it is much more comparable to
LIFO. The difference we see in earnings is 1955 million or 1.96 billion
(4155-2200).
If US GAAP was used and FIFO was permitted Net profit margin and return
on equity would increase since earnings are higher. The leverage ratio

would be also higher since assets would be lower under FIFO since cost of
inventory would go up.