Essay on Exxon Mobil and Chevron Financial Performance

In the past few years, they have experienced a significant increase in inventory days. Not having attractive inventory leads to a decrease in sales and an increase in discounts and write offs leading to further decreases in EBITDA Margins. In 2009, the inventory turnover took 215 days. This is significantly above Le Chateaus competitors, for example Reitman’s inventory took only 72 days (Annual Report 2010). This means it takes Le Chateaus three times as long to sell inventory compared to their competitors. To make matters worse, this trend has been exacerbated in recent years. Le Chateau’s turnover has ballooned to a staggering 341 days while Reitman’s has kept inventory turnover stable at only 76 days.

     Chevron Texaco, or Texaco Shell, is the leading competitor to ExxonMobil. Texaco is in the same areas of business as Exxon. Their petroleum products and lubricants are sold in the same markets, stores, and in many cases opposite street corners from each other. The two companies are very similar, but Exxon’s recent petroleum deals in the Middle East and Africa have allowed its stock price to jump ahead for the time being (1). In the industry, the two companies mainly compete for the ability to negotiate for new production. The competition is not made at the pump or at the local auto store. It seems that it’s more important to control oil than it is to sell it quickly. Because oil has so much value and power in the world, the industry is made of semi-friendly companies. Surviving and making as much profit as possible, is more important than trying to put people out of business.

Ratio analysis is a very useful tool when it comes to understanding the performance of the company. It highlights the strengths and the weaknesses of the company and pinpoints to the mangers and their subordinates as to which area of the company requires their attention be it prompt or gradual. The return on shareholder’s fund gives an estimate of the amount of profit available to be shared amongst the ordinary shareholders; where as the return on capital employed measures an organization 's profitability and the productivity with which its capital is utilized. Return on total assets is a profitability ratio that measures the net income created by total assets amid a period.

Next is Asset turnover with .55 times which is a measure of the efficiency of asset utilization. Finally the equity multiplier with 2.26 which is a measure of financial leverage of the firm. When compared to the traditional ratios we get similar results; Profit margin 25.44% (27% DuPont) versus 18.75% industry average. Asset turnover is .54 (.55 DuPont) versus .50 industry average. Equity multiplier 2.28 times (2.26 times DuPont) versus 2 times industry average. The results show that the DuPont analysis using ROE as the main determinant are very similar to the regular ratios. Furthermore the ROE of the traditional ratio is 31.32% with DuPont being 33.10% versus the industry average of 18.75% shows that the firms ROE is very robust. While the firm has some challenges with respect to liquidity and inventory management, as well as debt management it still is doing a good job with respect to its shareholders. However it could be doing a little better for the stockholders, and needs to address some of the above issues mentioned.

Exxon and Chevron are so different in a number of ways. When you compare Chevron to Exxon, Chevron is a smaller firm. The ratios of Exxon are relatively larger than Chevron's. Nevertheless, Chevron has a got a wide net working capital and market ratio than its counterpart Exxon. This therefore, means that because its larger networking capital, Chevron needs a lot of money

One of the most reputable resources that Exxon Mobil has today is a strong brand name. Exxon Mobil operates all over the world and is recognized in every part of the world (Datamonitor, 2008). When people all over the world know who a company is, what they do, and where they are located, the company gains a unique competitive advantage over

Exxon Mobil has a research and development department that is evolving its technologies to stay competitive. The company is continually working on assessing its products environmental life cycles to lessen the long term environmental impact. Exxon Mobil is striding for less greenhouse gas emissions then it has in the past.

Equity turnover rare is increasing. It means that company is producing more revenue with the investment.

Chevron is a multinational company whose primary business involves the exploration for, extraction of and retail of hydrocarbon products. The company trades on the New York Stock Exchange under the ticker symbol CVX. Its market cap of $226 billion makes it one of the largest companies in the world by that measure. Chevron has sales of $241.9 billion, net income of $26.18 billion and with a beta of 0.80 is a fairly low-risk investment (MSN Moneycentral, 2013).

This report consists of financial analysis of Exxon Mobil Corporation and it is based on the company annual report for the fiscal year ended December 31, 2006, on the company’s official documents placed at their website and on other appropriate sources. For convenience and simplicity, in this report the terms ExxonMobil, Exxon, Esso and Mobil, as well as terms like Corporation, Company, their and its, are sometimes used as abbreviated references to specific affiliates or groups of affiliates.

This paper focuses on a financial analysis of Chevron from the perspective of a potential creditor. The issue surrounds primarily the creditworthiness of Chevron rather than the type of credit that would be issued. Specifically, the issue is whether "we" would lend Chevron 10% of its net assets. The net assets for Chevron are $209.474 billion, so the amount in question is $20.9 billion in new debt. The report will first analyze the financial statements of Chevron in general terms, focusing on trends and ratios, and drawing conclusions about the overall financial health of the company based on that analysis. The second part of the paper will outline some of the criteria that a lending institution would have for lending to a company, and then that criteria will be applied to Chevron specifically.

Firms and Companies include ‘Ratios’ in their external report to which it can be referred as ‘highlights’. Only with the help of ratios the financial statements are meaningful. It is therefore, not surprising that ratio analysis feature are prominently in the literature on financial management. According to Mcleary (1992) ratio means “an expression of a relationship between any two figures or groups of figures in the financial statements of an undertaking”.

BP p.l.c. is an energy company with an upstream business of extracting crude oil and downstream business of providing processed energy to companies. It is listed in both the New York Stock Exchange (NYSE) based in the United States of America and the London Stock Exchange (LSE). BP is based in London and they carry out oil prospecting extraction and retail its product in more than 70 countries. Out of the companies operating in the oil industry, the biggest two competitor of BP is ExxonMobil and Chevron. ExxonMobil and Chevron are chosen due to their similarities to BP and they are ranked

Inventory turnover for Company A (3.08x) is higher than Company B (0.93x), that means inventories are sold and replaced faster than Company B. Company A has higher turnover because those institutions, especially hospitals “consume” health products faster and more. Lastly its show Company A has deep pipeline of its ethical pharmaceuticals.

Reviewing Exhibit 1 it is indicative that each year their actual inventory ratio continued to increase as opposed to decreasing. Keeping inventory in stock is good for clients but bad for capital when it remains on the shelves and doesn’t sell as quickly as you are producing it.