FIN F315 FINANCIAL MANAGEMENT

ASSIGNMENT-2
“ASSESSING THE SIGNIFICANCE OF
FINANCIAL MANGEMENT DECISIONS.”

EXXON MOBIL CORP. VS CHEVRON CORP.

Industry: OIL

AKHIL MAHAJAN 2017A4PS0820H

KASHISH BULANI 2017ABPS1153H

SHARDUL TAMANE 2017ABPS1332H

SANJANA KHOWAL 2017A4PS1682H

LIKHIT KANODIA 2017ABPS0800H

PARYAN 2017A1PS1106H
 ASSIGNMENT -2

BUSINESS LIFE CYCLE:

CASHFLOWS:

CHEVRON:

DECISION AMOUNT (in millions USD)

INVESTING -12,290

FINANCING -13,790

DIVIDEND 4.75 x 1914 (2018) = 9094

1898 x 4.48 (2017) = 8503.04
ANALYSIS:
Chevron corporation was founded in year 1879, thus we could expect chevron to be in its
maturity stage in its life cycle as it is an old company(140 years). As the company has
reached its maturity, the company has established cash flow and thus focuses on dividend
decision. We can see that the company reduced it financing and investing in 2016, this can be
accounted to the fact that the market of oil and gas industry hit an all point low in 2016. In
response, Chevron took action to improve their free cash flow with tighter spending and with
additional revenue from expected production growth. After the market was stabilized, the
company again started focusing on investing and dividend decision, seeking opportunities to
improve which are inventive.

EXXONMOBIL:

DECISION AMOUNT (in millions USD)

INVESTING -16,446

FINANCING -19,703

DIVIDEND 4271x 3.23 (2018) = 13,795

4271x 3.06 (2017) = 13,069
ANALYSIS:

Owing to the fact that the company has been recently established,i.e. in 1999, we can see the
company has pretty much stabilised. As we can see from the figure ,during the last four years,
the amount that company is using for investment decreased majorly during 2016, due to the
depression in the market of oil and gas industry. Also,as financing amount is negative for the
previous few years thus concluding that company is paying its long-term debts or/and
focusing on the rewarding decision.So,as the decision that company should focus on depends
on where the company is its business life cycle, analysing the data from last few years shows
that company has reached its maturity and will further focus on its dividend decision rather
than investing and financing. And so we expect that in further upcoming years company
focuses on shareholders wealth maximisation.