Note: In case you are not familiar with Masco Corporation, here is their business description:

Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes BEHR® paint; DELTA® and HANSGROHE® faucets, bath and shower fixtures; KRAFTMAID® and MERILLAT® cabinets; MILGARD® windows and doors; and HOT SPRING® spas.

This is Masco’s income statement. It is similar to Exhibit 2-14 on page 35 of our text.

MASCO CORPORATION and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended December 31, 2016, 2015 and 2014

(In Millions, Except Per Common Share Data)

2016

2015

2014

Net sales

$

7,357

$

7,142

$

7,006

Cost of sales

4,901

4,889

4,946

Gross profit

2,456

2,253

2,060

Selling, general and   administrative expenses

1,403

1,339

1,347

Income from litigation   settlements

—

—

(9

)

Impairment charge for other   intangible assets

—

—

1

Operating profit

1,053

914

721

Other income   (expense), net:

Interest expense

(229

)

(225

)

(225

)

Other, net

6

—

11

(223

)

(225

)

(214

)

Income from continuing   operations before income taxes

830

689

507

Income tax expense   (benefit)

296

293

(361

)

Income from continuing   operations

534

396

868

(Loss) income from   discontinued operations, net

—

(2

)

35

Net income

534

394

903

Less: Net income   attributable to non-controlling interest

43

39

47

Net income   attributable to Masco Corporation

$

491

$

355

$

856

This is the inventory footnote from Masco’s audited financial statement:

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

D. INVENTORIES

(In Millions)

At December 31

2016

2015

Finished goods

$

366

$

358

Raw material

254

238

Work in process

92

91

Total

$

712

$

687

Inventories, which include purchased parts, materials, direct labor and applied manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined by use of the first-in, first-out method.