Fin_200_Final

Krystal Simmons Final Project: Evaluating an Annual report University of Phoenix March 22, 2009 Reviewing Exxon Mobil’s annual reports it shows that the company is doing great financially. Comparing Exxon Mobil to others in the same industry is tough. Taking a look at other industries Exxon is leader in 7 of 12 chemical business segments they operate and 2nd in 4 others. Exxon Mobil has their mind set to open more plants nationwide in the future and they strongly agree that making a change within their company to help our environment is very important. Eight ratios will be commuted such as current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and price to earnings ratio. For 2006 and 2007 Exxon Mobil’s current ratio is: Current Ratio = Total Current Assets / Total Current Liabilities Current Ratio for 2007 = 85,963,000 / 58,312,000 Current Ratio for 2007 = 1.47 Current Ratio for 2006 = 75,777,000 / 48,817,000 Current Ratio for 2006 = 1.55 Taking a look at Phillips annual report and comparing it to Exxon Mobil it looks like Exxon Mobil doubled the revenue in 2007. Exxon Mobil is the leader around the world for oil. Looking at Phillips annual report total assets for Exxon was barely higher than Phillips. For 2006 and 2007 Exxon Mobil’s quick ratio is: Quick Ratio = (Current Assets – Inventories) / Current Liabilities Quick Ratio for 2007 = (85,963,000 - 15,013,000) / 58,312,000 Quick Ratio for 2007 = 70,950,000 / 58,312,000 Quick Ratio for 2007 = 1.21 Quick Ratio for 2006 = (75,777,000 - 13,987,000) / 48,817,000 Quick Ratio for 2006 = 1.26 For 2007 on the Phillips annual report their current liabilities were 26,882,000 which were lower than Exxon Mobil at 58,312,000. You can compare the equations above with the numbers from Phillips but it looks like Exxon overall had better numbers in 2007. For 2006 and 2007 Exxon Mobil’s Inventory Turnover Ratio Inventory Ratio = Cost of Goods Sold / Average Inventory Inventory Ratio for 2007 = 334,078,000 / 15,013,000 Inventory Ratio for 2007 = 22.25 Inventory Ratio for 2006 = 310,233,000 / 48,817,000 Inventory Ratio for 2006 = 6.35 For 2006 and 2007 Exxon Mobil’s Debt Ratio Debt Ratio = Total Debt / Total Assets Debt Ratio for 2007 = 7,183,000 / 85,963,000 Debt Ratio for 2007 = 8.35 Debt Ratio for 2006 = 6,645,000 / 75,777,000 Debt Ratio for 2006 = 8.76 For 2006 and 2007 Exxon Mobil’s Net Profit Margin Profit Margin = Net Income / Sales Profit Margin for 2007 = 40,610,000 / 390,328,000 Profit Margin for 2007 = 10.40 Profit Margin for 2006 = 39,500,000 / 365,467,000 Profit Margin for 2006 = 10.80 For 2006 and 2007 Exxon Mobil’s ROI ROI = (Net Present Value – Investments) / Investments ROI for 2007 = ROI for 2006 = For 2006 and 2007 Exxon Mobil’s ROE ROE = Net Income / Shareholder’s Equity ROE for 2007 = 40,610,000 / 121,762,000 ROE for 2007 = .33 ROE for 2006 = 39,500,000 / 113,844,000 ROE for 2006 = .34 For 2006 and 2007 Exxon Mobil’s Price to Earnings Ratio Price to Earnings Ratio = Market Value Per Share / Earnings Per Share Price to Earnings Ratio for 2007 = 93.69 / 7.36 Price to Earnings Ratio for 2007 = 12.72 Price to Earnings Ratio for 2006 = 76.63 / 6.68 Price to Earnings Ratio for 2006 = 11.47 Exxon Mobil has no problem with taking their stock and turning it into cash. “It's not necessarily the oil standard, but Exxon Mobil is the world's largest integrated oil company (ahead of Royal Dutch Shell) and BP). Exxon Mobil engages in oil and gas exploration, production, supply, transportation, and marketing worldwide. It has proved reserves of 12.8 billion barrels of oil equivalent, as well as major holdings in oil sands through Imperial Oil. Exxon Mobil's 37 refineries in 20 countries have a throughput capacity of 6.2 million barrels per day. The company supplies refined products to more than 28,600 gas stations in 100 countries. Exxon Mobil is also a major petrochemical producer.” (ExxonMobil.com) The cash conversion cycle is calculated by CCC = Inventory conversion period (in days) + Receivables conversion period (in days) – Payables conversion period (in days) Exxon Mobil’s 2007 CCC = 16.40 + 34.08 – 49.46 CCC = 1.02 days to convert stock into cash After comparing Exxon Mobil and Phillip’s letter to shareholders they basically have the same future goals for their company. Some of those goals are to have 0 injuries for the future years. They both explain where their earnings went and how they invested money into research. One thing that Phillips list is their drop in debt from the previous year. The company I chose was Exxon Mobil and in their letter they talked about how they invest their money for the future. They discuss future expansion in the company and the research for technology and helping the environment by discussing with auto makers about how they can help the environment as well. Based on the company’s financial statements which are listed below are: Long term debt for 2007 was 7,183,000 and for 2006 it was 6,645,000. Stock that Exxon Mobil owns is Exxon Mobil Corp. The yield currently is 2.42 %. The current selling price of the stock is $68.64 a share and the 52 week high average selling price is $96.12 and the 52 week low average is $56.51. From the first day of picking my company for my final to today I have learned more about annual reports than I thought I would. Taking information from an annual report isn’t easy and you have to review them closely. Comparing Exxon Mobil to other companies in the same industry is hard. Exxon Mobil compared to a company such as BP or Phillips is difficult. Each company has its own way of how it wants to become more known worldwide and how each company can compete with each other on technology and going green. BP stands from British Petroleum but they have made a new name for themselves such as Beyond Petroleum. They say Exxon has their heads in the sand and they can’t do anything but sale gas. I say that’s not true. After reviewing Exxon’s website several times for this project they have invested so much money into (3.5 billion) research. (ExxonMobil annual report) Phillips on the other hand can also compete with Exxon Mobil. Phillips has lower numbers compared to Exxon such as stock their stock is about $80-$90 where Exxon right now isn’t looking that good but has highs from $96.00 a share. Exxon Mobil is still the largest oil company in the world but there are companies out there that do keep Exxon on their toes and are right there to compete with them. With the economy the way it is and the way the NYSE is going and how it has drops everyday it is hard to tell someone to invest their money in stock. Many people around the world are losing money in the stock market. Exxon Mobil’s high was $96.12 but if you take a look at the low which was $56.51 and now the average is $68.64 they are all losing money. As good as Exxon Mobil is as a company and knowing that our economy is getting worse and will until it gets better I would say yes that people should take a look at the company’s annual report and notice how good the company does and look at the profit each year. If I was an investor it is hard to say how bad the stocks for all companies will get before they get better but I would trust Exxon after taking a hard look at the company and I would tell investors to invest their money within their company. Stock with Exxon is really low at this point and the low was $56.51 and now the average is $68.64 and that is still low for the 52 week average. If investors want to invest in Exxon Mobil just take a look at the stock chart for a couple of weeks and see what happens. I can’t make anyone go along with my choice of saying yes buy their stock but I would buy Exxon Mobil over anyone else in the industry. References ConocoPhillips Annual Report, 2007 Retrieved March 22, 2009 from http://wh.conocophillips.com/about/reports/ar07/letter.html Exxon Mobil’s Annual Report, 2006 and 2007 Retrieved March 22, 2009 from http://www.exxonmobil.com/corporate/files/news_pub_sar_2007.pdf Exxon Mobil, 2009 Retrieved from http://www.exxonmobil.com/corporate/