ExxonMobil Financial Statement Review
BUS401: Principles of Finance
The ExxonMobil website includes the 2018 Annual Report and the Financial Statements and Supplemental Information. On the ExxonMobil website the Income Statement and Statement of Cash Flows both include financial information for the years 2016, 2017, and 2018. The Balance Sheet however, only lists the financial information for the years 2017 and 2018. Mergent does have the Balance Sheet financial information for the year 2016. The information from the Mergent website was used to do comparison for the financial information contained in the Balance Sheet. Reviewing the Income Statement, according to the 2018 ExxonMobil Annual Report (2019), Revenues and other income have increased steadily in the years of 2016, 2017, and 2018. In 2016 Total Revenues were 208,114 million, and in 2017 Revenue jumped 36,249 million to 244,363 million. For the year 2018 Revenue increased another 45,849 million to 290,212 million. Using Horizontal Analysis we can examine changes in specific accounts or totals from period to period. The formula to use is, Change = (Current year – Base or prior year) / Base or prior year (Webb, 2012). The percentage of change in Revenue from 2016 to 2017 is 17% and the percentage of change in Revenue from 2017 to 2018 is 19%. Income from equity affiliates increased from 4,806 million in 2016 to 5,380 in 2017, an increase of 12% or 574 million. In 2018 the amount was 7,355 million which is a 1,975 million 37% increase. Notes concerning Income from equity affiliates are found in the 2018 Financial Statements and Supplemental Information (2019). The financial information relates to less-than-majority owned companies and majority owned subsidiaries in which minority shareholders have the right to participate in major management decisions. According to Note 7:
The Corporation’s ownership in these ventures is in the form of shares in corporate joint ventures as well as interests in partnerships. Differences between the company’s carrying value of an equity investment and its underlying equity in the net assets of the affiliate are assigned to the extent practicable to specific assets and liabilities based on the company’s analysis of the factors giving rise to the difference. The amortization of this difference, as appropriate, is included in “Income from equity affiliates” on the Consolidated Statement of Income.
Reviewing the Balance Sheet, according to Mergent, Total Assets in 2016 was 330,314 million. According to the 2018 Annual ExxonMobil Report (2019), Total Assets in 2017 were 348,691 million, which was an increase of 18,377 million and 6%. From 2017 to 2018 the change was a decrease of 2,495 million or -1%. Long term debt decreased from 2016 to 2017 and again from 2017 to 2018. In 2016 Long Term Debt was 28,932 million, and decreased 4,526 million in 2017 for a total of 24,406 million, a decrease of -16%. Long Term Debt decreased another -16% from 2017 to 2018, a decrease of 3,868 million to total 20,538 million. According to Note 14 in the 2018 Financial Statements and Supplemental Information (2019), “These amounts exclude that portion of long-term debt, totaling 4,070 million, which matures within one year and is included in current liabilities.” Reviewing the Statement of Cash Flows, according to the 2018 Annual ExxonMobil Report (2019), Net Income increased 8% from 2017 to 2018, 2017 total was 19,848 million and 2018 total was 21,421 million, an increase of 1,573 million. In 2016 Net Income was 8,375 million, a difference of 11,473 million from 2017, an increase of 13%. According to the 2016 Financial Statements and Supplemental Information (2017), “Changes in operational working capital, excluding cash and debt, decreased cash in 2016 by 1.4 billion.”
The 2018 Financial Statements and Supplemental Information (2019), notes these positive trends: The ability to participate in substantial investments to develop new energy supplies. ExxonMobil has access to significant capacity of long-term and short-term liquidity. ExxonMobil’s financial strength allows them to make large, long-term capital expenditures. Total debt was reduced by 4.5 billion in 2018. Some negative trends noted were, petroleum product sales were 18,000 barrels lower than in 2017. The fluctuation of crude oil, natural gas, petroleum product, and chemical prices has an impact on earnings. Because the Corporation does business in foreign countries it is subject to exchange rate risk. There have been a variety of lawsuits brought against ExxonMobil.
Due to the nature of oil and gas fields to decline in production, ExxonMobil will continually need to develop new technology and new fields to maintain and support cash flows (ExxonMobil, 2019).
(n.d.). Retrieved from http://www.mergentonline.com.proxy-library.ashford.edu/basicsearch.php
BiolaUniversity. (2012, December 07). James Webb: How to Read a Financial Statement [Crowell School of Business]. Retrieved from https://www.youtube.com/watch?v=Jkse-Wafe9U
ExxonMobil Corporation. (2017). 2016 Financial Statements and Supplemental Information. Retrieved April 29, 2019 from https://corporate.exxonmobil.com
Exxon Mobil Corporation. (2019). 2018 Annual Report. Retrieved April 25, 2019 from https://corporate.exxonmobil.com
ExxonMobil Corporation. (2019). 2018 Financial Statements and Supplemental Information. Retrieved April 29, 2019 from https://corporate.exxonmobil.com/news/newsroom/publications-and-reports#communityInvolvement