Essay on Exxon Mobil and Chevron Financial Performance

2071 Words May 1st, 2011 9 Pages
exxon mobil and chevron Exxon Mobil and Chevron Financial Performance Understanding the key ratios of a company is very important for investors. Each ratio uncovers the inner workings of the company, and may lead an investor to make a decision on whether to invest in the company, or to continue looking elsewhere. Exxon Mobil and Chevron are both in the same industry, and are virtually household names. In this study, key ratios of these two companies will be analyzed, and a comparison of results will be provided.
Exxon Mobil and Chevron – Financial Data
Exxon Mobil and Chevron are two of the most prominent companies in the energy sector, ranking 2nd and 4th, respectively, on Fortune 500’s list of America’s largest corporations
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Like current ratio also decreasing due to same reason stated above in current ratio section here, another reason can be found and that is inventory. Chevron has the mayor decreasing amount, the amount of inventory of chevron are not reaching up to the company own expectation and that is why the inventory pilling up.

Inventory Turn Over: The inventory Turn Over tells us how fast a company can sell its products usually in a year. The inventory turnover is computed as shown.
Inventory Turn Over = Cost of Goods Sold / Average Inventory.

It measures how many times a company's inventory has been sold and replaced during the year.
Here is the inventory turnover for Exxon and Chevron. Generally, the higher turnover indicates that merchandise is being handled more efficiently. In this case, Chevron has more efficiency in sell its product of 32.8% in comparison on Exxon with 28.1%. Chevron has 4.7% of affectivity more than Exxon. | EXXON MOBIL | | CHEVRON | | Dec-06 | | | Dec-06 | | Cost of Goods | 281,692 | | Cost of Goods | 144,139 | | Beginning Inventory | 9,321 | | Beginning Inventory | 4,121 | | Ending Inventory. | 10,714 | | Ending Inventory. | 4,656 | | Average Inventory | 10,017 | | Average Inventory | 4,388 | | Inventory Turn Over | 28.121 | | Inventory Turn Over | 32.848 | |

As a result, Chevron has less number of days’ sales in inventory

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