I preferred to analyze the company ExxonMobil as it is one of the biggest petroleum companies in the world. With a net income of 45.22 billon dollars in 2008, ExxonMobil realized the biggest net income in the World. The company represents 2% of NYSE capitalization.
ExxonMobil is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company. The company has 38 oil refineries in 21 countries constituting a capacity of 6.3 million barrels per day, and 42,000 service stations in 100 countries under the brands Exxon, Esso, and Mobil. The company has the major petroleum reserve for a private company with 22.4 billion barrels.
We can say that ExxonMobil is an extraordinary company with many aspects to consider. To obtain the best approach, we will analyze the concepts that are important to the company. In the second part, we will study the balance sheet of the company and in the third part, we will analyze its income statement. Finally, in the fourth part, we will study its cash flow balance.
[...] In consequence, this analysis reveals an improvement of collection period: ExxonMobil has less net receivable compared to the turnover in 2008 than in 2006. Thus, the customers seem to pay faster in 2008 than in 2006, they pay 9 days faster than in 2006. Inventory Turnover and Average Payment Period times times times Calculations: and and and Interpretation: We can see that the inventory turn 41 times in one year in 2008 against 35.25 times in 2006. Thus, we can affirm that there is a better inventory management. [...]
[...] Thus, Current assets of ExxonMobil are 50% higher than its current liabilities. In consequence, there is not bankruptcy risk. The decrease between 2006 and 2008 is insignificant. Debt Ratio Calculations: Interpretation: We can see that the debt ratio is below 0.5 that is exceptional for a company. Thus, ExxonMobil has few debts. In consequence, we can say that ExxonMobil has a great debt ratio and there is no debt. Long-Term Debt to Equity Equity Calculations: Interpretation: Thanks to this ratio, we can see that ExxonMobil is not in debt. [...]
[...] Thus, ExxonMobil must consider the policy of each state concerning natural resources. Petroleum industry is strategic and generates a large amount of money. In 2008, among the 10 biggest companies in the world in terms of turnover were petroleum companies. Moreover, the company it is necessary to consider the fact that the resources for this sector are limited. So, the companies must anticipate the future shortage. To resume, despite the fact that petroleum sector and gas sector are inevitable in our society, ExxonMobil must anticipate the future shortage that is going to happen in this century. [...]
[...] To compare, Saudi Aramco is four times larger than ExxonMobil in terms of turnover. In the gas industry, the company competes with the Russian State. Moreover, the company has some private competitors like Total, Shell and BP. One of the biggest private company in petroleum and gas sectors ExxonMobil is directly in competition with Shell, Total, and BP. With a turnover of 443 billion dollars, the company has the second largest turnover after Shell (458B$). However, the company has positioned above BP Chevron (263B$) and Total (234B£). [...]
[...] Cash Ratio Calculations: Interpretation: The cash ratio of ExxonMobil is higher than which is not common for a company. Thus, the company can reimburse all its current assets, thanks to its cash and marketable securities. In consequence, this ratio again proves strong financial position of the company. Conclusion To conclude, we can affirm that ExxonMobil has an excellent balance sheet. Thus, the company has no insolvency risk and high debt Moreover, the company has an exceptional financial position: the cash ratio is higher than and the long-term debt to equity is lower than 1. [...]
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