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Financial Analysis Exxon Mobile

In: Business and Management

Submitted By jungamals
Words 3182
Pages 13

Financial Analysis

JUNE 2015

Prepared by:

Maria Karpowicz-Wójcik

Monika Tyburska

Executive Summary

This report was commissioned to analyze financial statements for years 2010- 2014 of Exxon Mobil. It presents overall review of this company’s history and business, as well as its strategies and mission. Additionally, this report presents an impact of Exxon Mobil on social and natural environment. Moreover it describes how the company communicates social and environmental issues.

In analytical part of the report, we examined income statement and balance sheet for the above mentioned years. We looked for trends and presented them in form of graphs. Furthermore, this report shows calculations of financial ratios such as:

• Profitability ratios

• Liquidity ratios

• Solvency ratios

It presents trends over time and our comments.

Exxon Mobil – the story of success

Exxon Mobil Corporation is a motor fuel brand. The history of the company begun in 1870, when John D. Rockefeller and his partners established Standard Oil Company. This company was very successful for thirty years and by the year 1878, it was controlling 95% of US the oil industry. Because of the public protest that took place in 1911, the Supreme Court of the United States decided to divide one big company into 34 small companies. Two of these companies finally became Exxon and Mobil. In 1998, these companies signed an agreement, which cost $73.7 billion, in order to merge and create a new company called Exxon Mobil Corporation. The merger was done on November 30, 1999. During these years it has evolved from a regional marketer to the largest petroleum and petrochemical enterprise and has become the largest company in the world[1].

Exxon is engaged in exploration and production, refining, and marketing of oil and natural gas. Currently, it operates in most of the countries and it has been known by familiar brand names: Exxon, Esso and Mobil. These brands serve motorists at almost 29,000 service stations and provide more than one million of industrial and wholesale customers with fuel products. Fuel products and services are being sold to aviation customers at more than 630 airports and to marine customers at more than 180 ports around the world.[2]

The headquarters are located in Texas and company employs about 80,000 people.

During last years Exxon announced two major oil discoveries and a gas discovery in Gulf of Mexico. This is one of the largest discoveries in the Gulf of Mexico in the last decade.[3]

Exxon Environmental Policy

Around ten years ago Exxon Mobil introduced its project called “Protect Tomorrow. Today” This project is a set of expectations that serves as the foundation for company’s environmental performance. It was created to show that the company is aware of the social and economic needs of countries in which they do business. This project has become an integral part of company’s policy. The three key principles of “Protect Tomorrow. Today.” are:

• Delivery of superior environmental performance, leading to a competitive advantage;

• Driving environmental incidents with real impact to zero, through a process of continuous improvement; and

• Achieving industry leadership in focus areas valuable to the business.[4]

Environmental management is very important for Exxon. The company, on regular basis, tries to identify, assess, manage and monitor risks for environment that may be caused by its operations.

Exxon’s reputation regarding environmental sustainability was damaged by the Exxon Valdez oil spill in Prince William Sound, Alaska, on March 24, 1989 when more than 250,000 barrels of oil were spilled into Alaskan coastal waters, causing pollution to 1,300 miles of coastline, devastating regional fish stocks, killing over 250,000 sea birds and many hundreds more bald eagles, harbor seals, sea otters, and other animals. The company’s response to the disaster that was very bad and damaged its public image[5]. But Exxon learnt their lesson and since then they put a lot of effort to actions protecting environment nowadays.

Results analysis


|a) Trends | | | | | |
| |2010 |2011 |2012 |2013 |2014 |
|Revenue |344,00 |437,64 |428,38 |393,72 |364,76 |
|Gross Profit |93,34 |113,17 |106,98 |89,88 |78,97 |
|Net Income |30,46 |41,06 |44,88 |32,58 |32,52 |


|b) Growth | | | | | |
| | | | | | |
| |2010 |2011 |2012 |2013 |2014 |
|Revenue |100% |127% |125% |114% |106% |
|Gross Profit |100% |121% |115% |96% |85% |
|Net Income |100% |135% |147% |107% |107% |


The above presented graphs clearly show gradual decrease of revenue, gross profit and net income. The best results were gained by the company in 2011 and 2012, whereas 2014 proves significant drop of these values.


| |2010 |2011 |2012 |2013 |2014 |
|Sales/ Revenue |344,00 |437,64 |428,38 |393,72 |364,76 |
|Cost of goods sold |250,66 |324,47 |321,40 |303,84 |285,80 |
|SG&A Expense |13,89 |14,18 |13,13 |12,88 |12,60 |
|goods sold vs. Revenue |73% |74% |75% |77% |78% |
|SG&AExpensevs. Revenue |4% |3% |3% |3% |3% |



These calculations present cost of goods sold and SG&A, as well as their percentage value against sales. Cost of goods sold includes the cost from Exxon’s suppliers plus any additional costs necessary to get ready for sale. This value is on stable level of approx. 74%, apart from 2013 and 2014, when it reached the level of almost 80% of revenue. SG&A is the acronym for selling, general and administrative. These are the expenses connected with promotion, sales, and delivery of the company's products and services. As it is clearly visible in graphs, this expense represents 3% of Revenue.


| |2010 |2011 |2012 |2013 |2014 |
|Total Assets |302,51 |331,05 |333,8 |346,81 |349,49 |
|Non-current Assets |243,53 |258,09 |269,34 |287,5 |296,58 |
|Working Capital |-3,65 |-4,55 |0,32 |-12,41 |-11,72 |
|Long Term Debt |12,23 |9,32 |7,93 |6,89 |11,65 |
|Equity |152,68 |160,74 |171,66 |180,5 |181,06 |


Frist graph shows the value of total assets and working capital. As working capital is less than 1.0, it means that Exxon might face serious liquidity problems in the future.

Regarding the next components as: Equity and Long Term Debt in relation to Total Assets the trend is running as follows:



| |2010 |2011 |2012 |2013 |2014 |
|Total Assets |302,51 |331,05 |333,8 |346,81 |349,49 |
|Non-current Assets |243,53 |258,09 |269,34 |287,5 |296,58 |
|Long Term Debt |12,23 |9,32 |7,93 |6,89 |11,65 |
|non-current assets vs. TOTAL ASSETS |81% |78% |81% |83% |85% |
|long term debt vs TOTAL ASSETS |4% |3% |2% |2% |3% |

Below graph shows the value of total assets, non-current assets and long term debt.


Percentage value shows that both: non-current assets and long term debt increased in 2014, as compared to previous years.


6) Profitability ratios

| |
|Gross profit margin |
| |
|2010 |2011 |2012 |2013 |2014 |
|27,1% |25,9% |25,0% |22,8% |21,6% |
| | | | | |


This ratio measures how profitable a company sells its goods. Higher ratios mean that the company is selling their inventory at a higher profit percentage. 21,6% gross profit margin means that for every dollar generated in sales in 2014, Exxon had 22 cents left to cover basic operating costs and profit.

Net profit margin

|2010 |2011 |2012 |2013 |2014 |
|6,3% |7,1% |7,2% |6,2% |4,9% |


The profit margin ratio shows what percentage of sales are left after all expenses are paid by the company. In other words, it presents how good a company is at converting revenue into profits available for shareholders. It also gives an information if the company is running efficiently. Between 2010 and 2013 this ratio was quite high but in 2014 it dropped, what indicates that the expenses are too high and the management needs to cut them.


|2010 |2011 |2012 |2013 |2014 |
|8,9% |12,0% |11,5% |8,4% |6,1% |


Return on capital employed shows investors how many dollars in profits each dollar of capital employed generates. So higher ratio would be more favorable. A return of 12% in 2011 indicates that for every dollar invested in capital employed, Exxon made $12 dollars of profits. This result deteriorated dramatically in 2014, as it dropped by half.

Liquidity ratios

Current ratio

|2010 |2011 |2012 |2013 |2014 |
|0,94 |0,94 |1,00 |0,83 |0,82 |


Current ratio measures company’s ability to pay off its short term liabilities. A higher value is always better, because it shows the company can more easily make current debt payments. In 2010- 2011 Exxon Mobil had enough current assets to pay off 94% of their current liabilities. In 2012 this value increased even more in order to finally drop down to 83 and 82% in 2013-2014 respectively. This proves that the company earns less and less from operations to support activities and at the same time it can more easily make current debt payment.

Quick ratio

|2010 |2011 |2012 |2013 |2014 |
|0,73 |0,75 |0,78 |0,60 |0,56 |
| | | | | |


Quick ratio shows how well the company can quickly convert its assets into cash in order to pay off its current liabilities. If a company has enough assets that can be quickly converted into cash, it will be able to pay off its obligations without having to sell any long-term assets. Between 2010 and 2013 Exxon Mobil had a quick ratio around 0.8, whereas in 2014 it reached the lowest level of 0.56. It means that in the event of difficult financial situation, it will have to sell a part of its long term assets.

Receivables collection period

|2010 |2011 |2012 |2013 |2014 |
|34,25 |32,23 |29,81 |30,73 |28,03 |


Receivables collection period means how long customers are taking to pay a company. In 2010 this period was over 34 day but it is clearly visible that Exxon was looking for a way to reduce it, so that it finally reached the level of 28 days in 2014.

Inventory holding period

|2010 |2011 |2012 |2013 |2014 |
|18,90 |16,90 |16,51 |19,39 |21,30 |


Inventory holding period is used to measure how efficiently a company manages its inventory. Lower value proves better performance in fuel industry, which part is Exxon Mobil.

Risk Ratios


|2010 |2011 |2012 |2013 |2014 |
|0,10 |0,08 |0,06 |0,12 |0,16 |
| | | | | |


This ratio shows the percentage of company financing that comes from creditors and investors. A lower value usually implies a more financially stable business. As gearing went up drastically in 2013 and 2014 as compared to 2012, Exxon might be considered more risky to creditors and investors than companies with a lower ratio.

Interest cover

|2010 |2011 |2012 |2013 |2014 |
|0,00 |0,01 |0,02 |0,00 |0,00 |


This ratio calculates the company’s ability to afford the interest on the debt. Result less than 1 in 2013 and 2014, means that Exxon isn’t making enough money to pay the interest on its debt. It showed the investors, that the company is risky and probably would never get additional financing from the bank.

Appendix 1

Annual Financials for Exxon Mobil Corp. -Balance sheet
|Fiscal year is January-December. All values USD millions. |2010 |2011 |2012 |2013 |2014 |
|Cash & Short Term Investments |8.46B |13.07B |9.92B |4.91B |4.66B |
|Cash Only |8.45B |13.07B |9.92B |4.91B |4.66B |
|Short-Term Investments |2M |- |- |- |- |
|Total Accounts Receivable |32.28B |38.64B |34.99B |33.15B |28.01B |
|Accounts Receivables, Net |25.44B |30.04B |28.37B |25.99B |18.54B |
|Accounts Receivables, Gross |25.79B |30.21B |28.52B |26.13B |18.7B |
|Bad Debt/Doubtful Accounts |(350M) |(167M) |(145M) |(140M) |(161M) |
|Other Receivables |6.85B |8.6B |6.61B |7.16B |9.47B |
|Inventories |12.98B |15.02B |14.54B |16.14B |16.68B |
|Finished Goods |9.85B |11.67B |10.84B |12.12B |12.38B |
|Work in Progress |0 |0 |0 |0 |0 |
|Raw Materials |3.12B |3.36B |3.71B |4.02B |4.29B |
|Progress Payments & Other |- |- |- |- |- |
|Other Current Assets |5.27B |6.23B |5.01B |5.11B |3.57B |
|Miscellaneous Current Assets |5.27B |6.23B |5.01B |5.11B |3.57B |
|Total Current Assets |58.98B |72.96B |64.46B |59.31B |52.91B |
|Net Property, Plant & Equipment |199.55B |214.66B |226.95B |243.65B |252.67B |
|Property, Plant & Equipment - Gross |373.94B |394B |409.31B |434.52B |446.79B |
|Buildings |- |- |- |- |- |
|Land & Improvements |- |- |- |- |- |
|Computer Software and Equipment |- |- |- |- |- |
|Other Property, Plant & Equipment |373.94B |394B |409.31B |434.52B |446.79B |
|Accumulated Depreciation |174.39B |179.33B |182.37B |190.87B |194.12B |
|Total Investments and Advances |28.27B |28.25B |28.93B |30.21B |30.36B |
|Other Long-Term Investments |1.56B |1.54B |437M |0 |526M |
|Long-Term Note Receivable |7.07B |6.08B |5.79B |6.12B |0 |
|Intangible Assets |- |- |- |- |- |
|Net Goodwill |- |- |- |- |- |
|Net Other Intangibles |- |- |- |- |- |
|Other Assets |5.11B |4.87B |4.4B |4.7B |9.6B |
|Tangible Other Assets |5.11B |4.87B |4.4B |4.7B |9.6B |
|Total Assets |302.51B |331.05B |333.8B |346.81B |349.49B |

Liabilities & Shareholders' Equity
| |2010 |2011 |2012 |2013 |2014 |
|ST Debt & Current Portion LT Debt |2.79B |7.71B |3.65B |15.81B |17.47B |
|Short Term Debt |2.44B |4.28B |2.63B |14.77B |16.7B |
|Current Portion of Long Term Debt |345M |3.43B |1.03B |1.03B |770M |
|Accounts Payable |30.78B |33.97B |33.79B |30.92B |25.29B |
|Income Tax Payable |10.26B |12.94B |10.02B |8.25B |5.39B |
|Other Current Liabilities |18.81B |22.89B |16.68B |16.74B |16.49B |
|Dividends Payable |- |- |- |- |- |
|Accrued Payroll |- |- |- |- |- |
|Miscellaneous Current Liabilities |18.81B |22.89B |16.68B |16.74B |16.49B |
|Total Current Liabilities |62.63B |77.51B |64.14B |71.72B |64.63B |
|Long-Term Debt |12.23B |9.32B |7.93B |6.89B |11.65B |
|Long-Term Debt excl. Capitalized Leases |11.92B |9.06B |7.5B |6.52B |11.28B |
|Non-Convertible Debt |11.92B |9.06B |7.5B |6.52B |11.28B |
|Convertible Debt |0 |0 |0 |0 |0 |
|Capitalized Lease Obligations |304M |260M |431M |375M |375M |
|Provision for Risks & Charges |19.37B |24.99B |25.27B |20.65B |25.8B |
|Deferred Taxes |31.62B |32.4B |34.3B |37.71B |35.28B |
|Deferred Taxes – Credit |35.15B |36.62B |37.57B |40.53B |39.23B |
|Deferred Taxes – Debit |3.53B |4.22B |3.27B |2.82B |3.96B |
|Other Liabilities |20.45B |21.87B |27.23B |26.52B |27.11B |
|Other Liabilities (excl. Deferred Income) |20.45B |21.87B |27.23B |26.52B |27.11B |
|Deferred Income |- |- |- |- |- |
|Total Liabilities |149.83B |170.31B |162.14B |166.31B |168.43B |
|Non-Equity Reserves |0 |0 |0 |0 |0 |
|Preferred Stock (Carrying Value) |0 |0 |0 |0 |0 |
|Redeemable Preferred Stock |0 |0 |0 |0 |0 |
|Non-Redeemable Preferred Stock |0 |0 |0 |0 |0 |
|Common Equity (Total) |146.84B |154.4B |165.86B |174B |174.4B |
|Common Stock Par/Carry Value |9.37B |9.51B |9.65B |10.08B |10.79B |
|Retained Earnings |298.9B |330.94B |365.73B |387.43B |408.38B |
|ESOP Debt Guarantee |0 |0 |0 |0 |0 |
|Cumulative Translation Adjustment/Unrealized For. Exch. Gain |5.07B |4.17B |2.41B |(846M) |(5.95B) |
|Unrealized Gain/Loss Marketable Securities |0 |0 |0 |0 |(60M) |
|Revaluation Reserves |0 |0 |0 |0 |0 |
|Treasury Stock |(156.61B) |(176.93B) |(197.33B) |(212.78B) |(225.82B) |
|Total Shareholders' Equity |146.84B |154.4B |165.86B |174B |174.4B |
|Accumulated Minority Interest |5.84B |6.35B |5.8B |6.49B |6.67B |
|Total Equity |152.68B |160.74B |171.66B |180.5B |181.06B |
|Liabilities & Shareholders' Equity |302.51B |331.05B |333.8B |346.81B |349.49B |

Appendix 2

Annual Financials for Exxon Mobil Corp.
Income statement
|Fiscal year is January-December. All values USD millions. |2010 |2011 |2012 |2013 |2014 |
|Sales/Revenue |344B |437.64B |428.38B |393.72B |364.76B |
|Cost of Goods Sold (COGS) incl. D&A |250.66B |324.47B |321.4B |303.84B |285.8B |
|COGS excluding D&A |235.9B |308.88B |305.51B |286.66B |268.5B |
|Depreciation & Amortization Expense |14.76B |15.58B |15.89B |17.18B |17.3B |
|Depreciation |14.76B |15.58B |15.89B |17.18B |17.3B |
|Amortization of Intangibles |- |- |- |- |- |
|Gross Income |93.34B |113.17B |106.98B |89.88B |78.97B |
|SG&A Expense |13.89B |14.18B |13.13B |12.88B |12.6B |
|Research & Development |1.01B |1.04B |1.04B |1.04B |971M |
|Other SG&A |12.88B |13.14B |12.09B |11.83B |11.63B |
|Other Operating Expense |36.89B |40.78B |36.31B |33.23B |32.29B |
|Unusual Expense |18M |0 |(6.5B) |0 |5M |
|EBIT |(18M) |3.5B |6.5B |(3M) |(5M) |
|Non-Operating Income/Expense |0 |0 |0 |146M |4.52B |
|Non-Operating Interest Income |0 |0 |0 |0 |0 |
|Equity in Affiliates (Pretax) |10.68B |15.29B |15.01B |13.93B |13.32B |
|Interest Expense |259M |247M |327M |132M |286M |
|Gross Interest Expense |791M |840M |833M |441M |630M |
|Interest Capitalized |532M |593M |506M |309M |344M |
|Pretax Income |52.96B |73.26B |78.73B |57.71B |51.63B |
|Income Tax |21.56B |31.05B |31.05B |24.26B |18.02B |
|Income Tax - Current Domestic |1.61B |2.04B |2.48B |1.51B |957M |
|Income Tax - Current Foreign |21.09B |28.85B |25.65B |22.12B |14.76B |
|Income Tax - Deferred Domestic |49M |1.58B |1.1B |(116M) |900M |
|Income Tax - Deferred Foreign |(1.19B) |(1.42B) |1.82B |757M |1.4B |
|Income Tax Credits |- |- |- |- |- |
|Equity in Affiliates |- |- |- |- |- |
|Other After Tax Income (Expense) |0 |0 |0 |0 |0 |
|Consolidated Net Income |31.4B |42.21B |47.68B |33.45B |33.62B |
|Minority Interest Expense |938M |1.15B |2.8B |868M |1.1B |
|Net Income |30.46B |41.06B |44.88B |32.58B |32.52B |
|Extraordinaries & Discontinued Operations |0 |0 |0 |0 |0 |
|Extra Items & Gain/Loss Sale Of Assets |0 |0 |0 |0 |0 |
|Cumulative Effect - Accounting Chg |0 |0 |0 |0 |0 |
|Discontinued Operations |0 |0 |0 |0 |0 |
|Net Income After Extraordinaries |30.46B |41.06B |44.88B |32.58B |32.52B |
|Preferred Dividends |0 |0 |0 |0 |0 |
|Net Income Available to Common |30.46B |41.06B |44.88B |32.58B |32.52B |
|EPS (Basic) |6.24 |8.43 |9.70 |7.37 |7.60 |
|Basic Shares Outstanding |4.89B |4.87B |4.63B |4.42B |4.28B |
|EPS (Diluted) |6.22 |8.42 |9.70 |7.37 |7.60 |
|Diluted Shares Outstanding |4.9B |4.88B |4.63B |4.42B |4.28B |

Copyright 2015 FactSet Research Systems Inc. All rights reserved. Source FactSet Fundamentals.






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Exxon Mobile

...* Intro * A strategic planning initiative for the organization selected for the Week 2 assignment ExxonMobil, an American multinational oil and gas corporation; whose headquarters is in Irving, Texas which is North of Dallas in the United States of America. It is the descendant of John D. Rockefeller’s Standard Oil Company, and was established on November 30, 1999, when Exxon and Mobil merged together. As one of the largest oil and gas corporations to date, with a daily production of $3.921 million BOE, in 2008 ExxonMobil was 3% of world production, which serves as less than their competition. The company’s strategic thinking is simple. Keeping the promise of being the premier petroleum and petrochemical company in the world, they must commit to providing superior financial and operating results while standing by the company’s ethical standards of business conduct. By doing so, the organization shall create the foundation in those commitments to serve those they interact with. The strategic planning, which should align with the company’s overall vision which is to become the center of excellence for all key water related technologies, especially to those closest to the petroleum and municipal sectors. Next step, deliver the business strategy which shows how the organization proves their superior excellence within daily operations, cash flow, and creating long-term shareholder value. By continuously applying this business strategy, ExxonMobil centers the......

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Exxon Mobile

...In depth look into Exxon Mobil Chris Maag Abstract The basis of this paper is to examine the past and most recent development of Exxon Mobil. This research will highlight key study points including history, supply and demand, price elasticity, cost of production, competitive advantages, entry barrier, product substitution, market share and structure. Various information used for this study are company history statements, SWOT analysis, and financial reports. The story of this giant oil company has become more intriguing with the every increasing demand for oil, oil-powered products, driving global production nearly to 5.3 million barrels a day. This paper will investigate alternate energy and how the world is slowly gravitating towards that shift. Company Introduction In our economic day and age, there is a high reliance of oil and gas in everything used in daily task. From cooking, to driving cars and keeping warm during the winter season, it is one of the essential necessities in current modern time that keeps the human race thriving. It is used in the production of certain home and household materials. Gas is used in producing fertilizers and a wide range of industrial products, including plastics and polymers, textiles, paints and dyes. In this study there will be a focus on one-of-world’s largest oil companies – Exxon Mobil and examine the corporations’ economic value. What is Exxon Mobil? Exxon Mobil, as we have stated previously is one of the largest......

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Resumen Ejecutivo Exxon Mobile

...Resumen Ejecutivo Principios de Contabilidad ACC/208 16 de junio de 2012 Oscar Rosario Figueroa * Resumen Ejecutivo * EXXON MOBILE * ExxonMobil Corporation es una empresa petrolera estadounidense. Sus actividades se extienden por más de 40 países de todo el mundo e incluyen, entre otras, la explotación, elaboración y comercialización de productos petroleros y gas natural, así como la fabricación de productos químicos, plásticos y fertilizantes. * Historia: Exxon Mobil surgió de la fusión de las herederas de la Standard Oil perteneciente a John D. Rockefeller, creada en 1870. Para 1939 esta empresa es la más grande el mundo, y solamente tiene como rival a la SHELL que extrae petróleo de México. Exxon Mobil Corporation se formó en 1999 gracias a la fusión de dos grandes compañías petroleras, Exxon y Mobil. En 1998, Exxon y Mobil firmaron en EE.UU. un acuerdo por U$73,7 billones para fusionarse y formar una nueva empresa llamada Exxon Mobil Corporation, la empresa más grande del planeta. Tras las correspondientes aprobaciones accionarias, la fusión se completó el 30 de noviembre de 1999. La fusión de Exxon y Mobil fue única en la historia de Estados Unidos, ya que reunió las dos mayores empresas del conglomerado Standard Oil de John D. Rockefeller; la Standard Oil Company de Nueva Jersey (Exxon) y la Standard Oil Company de Nueva York ( Mobil), que habían sido separadas forzosamente por orden del Gobierno norteamericano casi 100 años antes. Como...

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Exxon Mobile Market Analysis

...Exxon Mobil is an oil and gas company that was founded in 1999; a merger of Exxon and Mobil. It is a Descendant of John D Rockefeller’s Standard Oil Company (Exxon Mobil). Exxon is a US based company with its head quarters located in Irving Texas, even though it is considered an international corporation. Exxon Mobil is considered the world’s largest publicly traded international oil and gas company, and has even been ranked as the number one traded company in the world. Currently Exxon is traded on the New York Stock Exchange, is a Dow Jones Industrial Average Component as well as a S&P 500 Component (Exxon Mobil). When it comes to oil, Exxon Mobil does it all. With 102,700 employees, Exxon has broken its operations into two main categories Upstream and Downstream (Yahoo Finance). Exxon does partake in other types of operations such as it operates coal mines and has its own IT, real estate, help center, as well as an engineering and chemical research and development department which fall under the umbrella of Exxon Mobil Corp (Exxon Mobil). Exxon’s two main divisions are incredibly important in keeping its industry advantage, where the Upstream sector is responsible for the exploration of new resources in an efficient and economical manner. The Upstream sector also extracts resources and then deals with the wholesale and distribution of the minerals. The Down Stream operations include refining the mineral and managing retail operations and marketing. Due to Exxon’s vast...

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A Look at Cost of Capital Decisions at Exxon Mobile

...A Look at Cost of Capital Decisions at Exxon Mobile American Military University Abstract This paper discusses and analyses the cost of capital decisions Exxon Mobile faces after its acquisition of XTO Energy. The advantages and disadvantages of both single company – wide cost of capital and divisional costs of capital are detailed. Finally, the method of estimating the costs of capital and determining how Exxon Mobile could best evaluate the weights to use for various sources of capital is discussed. A Look at Cost of Capital Decisions at Exxon Mobile Due to its recent acquisition of XTO Energy, Exxon Mobile must reevaluate how it determines the proper cost of capital for use in making corporate investments across the company’s many business units. Essentially, Exxon Mobile has two choices, it can either use a single company – wide cost of capital for analyzing capital expenditures or it can evaluate the divisional costs of capital. Both of these two methods offer their own advantages and disadvantages in analyzing capital expenditures, however the divisional weighted average cost of capital is the best choice for Exxon Mobile due to its recent acquisition of XTO energy. The consequences of Exxon Mobile using a company - wide cost of capital are that is could lead to the overinvestment or underinvestment into divisions where the beta varies widely from the company beta (Hung Il, 2008). Companies such as Exxon Mobile have many different divisions that are separated......

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Chevron Financial Analysis

...Analysis of Chevron Introduction Chevron Corporation is a multinational energy company that is based in the United States. It is the second largest U.S oil company after Exxon Mobil Corporation, and is also the fourth largest oil company in the world. Chevrons mission statement is “At the heart of The Chevron Way is our vision… to be the global energy company most admired for its people, partnership and performance.” Chevron was first founded in 1876 as Pacific Coast Oil Company in California. At that time oil started to gain a market and have a higher value. Pacific expanded dramatically after the discovery of oil in Saudi Arabia. Twenty years later, the company merged with Iowa Standard, forming Standard Oil California (Socal) as the new company. Socal successfully gained a market in the United States and Asia. In the 1970’s, the rise of the Organization of Petroleum Exporting Countries (OPEC) cast Socal out of the Middle East region, which caused a great loss to the company. In 1984 Socal purchased Gulf Corporation for $13.2 million, which, at the time, was the largest oil producer and distributer in the Middle East. Acquiring Gulf Corporation doubled Socal’s oil and gas reserves. As a result it generated great profit to the company by the late 1990’s because of the increase of gasoline prices. Socal also changed its name to Chevron during that period of time. Chevron grew and expanded because of the amount of subsidies and mergers that it gained from every region they......

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Stock Analysis of Exxon Mobil

...STOCK ANALYSIS REPORT - Exxon Mobil Corporation (XOM) –August 15th , 2011 [pic] Industry: Oil and Gas Operations Sector: Energy Recommendation: SELL Price: $74.29 (as of  August 15th 2011, 4:00pm ET) Intrinsic Value: $52.10 or 42.6% overvalued Fundamentals Grade: A Investment Style: Large Cap Blend CORPORATE INFORMATION [pic] Location: 5959 Las Colinas Boulevard Irving, TX 75039 Phone: 972-4441000 Fax: 972-4441348 Web Site: Employees: 83,000 Exchange: NYSE BUSINESS SUMMARY Exxon Mobil Corporation (Exxon Mobil) through its divisions and affiliates is engaged in exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. • ExxonMobil is the largest integrated oil company, with operations in over 200 countries. This globally diversified enterprise produces superior returns in its business segments when compared to other major oil and gas companies. • Exxon has a strong balance sheet with a cash position of approximately $13B and 0.07 Debt-to equity. Exxon has the liquidity and credit to invest in high return projects around the world. • Prices for oil and gas are expected to rise in the foreseeable future. Emerging market growth and increasing need for energy will place upward pressure on prices. Exxon will benefit as the world’s largest oil and gas company (by reserves, excluding national oil......

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Critical Analysis of Csr at Exxon-Mobil favorable to their financial success. Hence, although they behave more responsible to some extent, it would be wrong to claim that they are more ethical and moral. This is evident from often present manipulation of CSR actions and the fact that a lot of CSR rhetoric is geared towards advertisement purposes. As some companies devote more resources to the external communication of CSR practices, this creates an image that they are more responsible. In order to get the insight into the real role of CSR in the industry, a critical analysis of the CSR strategy of Exxon is presented below. Exxon is a major global oil multinationals that have significant influence on the oil industry and is a trend and standard setter. The concept of CSR itself is divided into two main spheres – macro and micro. Former deals with more global topics, mainly the company’s stance over the issue of climate change. Later is focused more on social aspects of the CSR, such as community development, relations with the governments etc. Exxon-Mobil Company Overview Exxon-Mobil is one of the world's largest companies and is currently ranked no.2 in the Fortune 500 global companies. The sheer size of the company is indicated by its financial flows. Despite the recession and drop in oil prices -- ranging from more than $146 a barrel to around $45 a barrel -- Exxon pulled in $443 billion in revenues and $45 billion in earnings in 2009. With more than 100,000 employees, Exxon-Mobil conducts......

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Exxon Mobile Case

...Exxon Mobil is the largest U.S. Company in the world and it participates in three very profitable industries: Mining/Crude-Oil industry, Petroleum Refining, and Chemicals. Exxon Mobil is a multinational oil and gas corporation. They have evolved over the past 125 years as a regional marketer of kerosene in the U.S. to the largest publicly traded petroleum and petrochemical enterprise in the world. Today Exxon Mobil operates in most of the world's countries and is best known by their familiar brand names: Exxon, Esso and Mobil. They make the products that drive modern transportation, power cities, lubricate industry and provide petrochemical building blocks that lead to thousands of consumer goods. Exxon Mobil was founded by John Rockefeller and his associates in 1870 originally named standard oil company. By 1882 Standard Oil Company was renamed Standard Oil Company of New Jersey (Jersey Standard) and the Standard Oil Company of New York (Socony). Standard Oil broke up into 34 unrelated companies after a U.S. Supreme Court ruling, including Jersey Standard, Socony, and Vacuum Oil. After 100 years in business the company went through yet another name change to Mobil Oil Corporation. In 1972 Jersey Standard becomes Exxon Corporation. In November 30, 1999, Exxon and Mobil join together to become Exxon Mobil Corporation. The merger increased their ability to be a more effective global competitor in the volatile economy and in an industry that is very competitive. In 2005 both......

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Exxon Mobil Analysis

...The weights of debt was used was 51% whereas the weights of equity used was 49%. Comparing this to the market value the weight of debt being nearly 3% while equity overshadows at the 97%. Although the book and market weights differ substantially their WACC doesn’t vary much; the book value cost of capital being 3.8% and the market value being 4%.Should Exxon take on project A, with a NPV of over 182 million and an IRR of about 26%, we would agree to definitely accept. But , you really cant say that without doing sensitivity analysis. We choose to do the analysis on the cost of capital because that’s what I feel could fluctuate the most. Even at rates of 3% to 6%. The NPV didn’t move much which allows me to assume this is a pretty safe project for the company to take on. Rf page , AAA corporate yeild , 10 year Treasury Yeild and Treasury Yeild , Exxon Beta S & P 500 Yeild bond shares outstanding and price !!!...

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