Accounting policy

Cost of inventories includes the purchase, conversion, and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories is determined by using the weighted average cost or first-in, first-out (FIFO) method. Inventories having a similar nature and use are measured using the same cost formula.

Inventories are measured at the lower of the purchasing cost (raw materials and merchandise) or production cost (work in progress and finished goods), and net realizable value. Net realizable value represents the estimated selling price, less all estimated costs of completion and the estimated costs necessary to make the sale.

In € million

 

2016

 

2015

Finished goods

 

1,051

 

1,172

Raw materials and supplies

 

649

 

702

Work in progress

 

45

 

63

Total

 

1,745

 

1,937

Write-downs

 

(73)

 

(71)

Net total

 

1,672

 

1,867