Running head: EXECUTIVE SUMMARY FOR EXXON MOBILE COMPANY 1

Executive Financial Summary for ExxonMobil Company

Daniela Aranguren

Principles of Accounting I-DL-B1 Gisselle M. Moshanko

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‘Executive Financial Summary for ExxonMobil Company’

Exxon Mobil Corporation, also known as ExxonMobil, is a multinational company

interested in oil and gas. The company has its headquarters in Texas. Exxon and Mobil merger

on 30th November 1999 gave birth to ExxonMobil. This was spearheaded by its founder John D.

Rockfeller. The company’s history can be traced to as early as 1859, when the first oil well was

drilled by Edwin Drake and Billy Smith. In 1870 the Standard Oil Company was formed by

Rockfeller and associates with the name chosen to reflect uniformity in high quality. Some of the

subsidiaries of ExxonMobil include Mobil, Imperil, and XTO Energy. In 2020, the ExxonMobil

audit committee gave a mandate to PricewaterhouseCoopers LLP (‘PWC’) to audit the company.

The company is listed on the New York Stock Exchange, with their stock symbol being

XOM with a current share valuation of about 41 U.S dollars. This is an undervaluation and

presents a good opportunity for entry. Cash and cash equivalents have seen remarkable growth

increasing from U.S dollars 3,089 million as of December 2019 to U.S dollars 4,364 million as

of December 2020. This consistent increase in cash and cash equivalents in two consecutive

years is an indication of the company’s strong competitive edge in generating cash.

After stagnating in 2017 and 2018, the total current assets for ExxonMobil in 2019 grew

to close the year 2019 at about 50,052 Billion U.S dollars which was an increase of 4.33 percent

from its total current assets value in 2018. However, the total assets declined by 10.31 percent in

2020, closing the year at 44,893 Billion U.S dollars. This value of Total Current Assets has a link

to the company’s Net working capital, which is arrived at by subtracting the Total Current

liabilities from the total current assets.

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Looking at the company’s annual report for the two last years, Accounts Receivables and

Inventories are the largest current assets for ExxonMobil, with Net Accounts receivables being

21,100 million U.S dollars in 2019 and slightly declining to 16,339 million U.S dollars in 2020.

Inventories for the two years stood at 18,828 million U.S dollars in 2019 and grew to close at

18,850 million U.S dollars at the end of 2020. The high inventories figures were a clear

indication that the company’s products were in high demand during the two consecutive

financial years. It also shows that the company employed effective marketing activities to

promote its brand for a broader appeal to customers. The high Account receivables, on the other

hand, show that ExxonMobil has in place sound credit collection and is able to collect money

from its key accounts within a very short time.

Having had a growth of 4.74 percent on total assets from 2018 to close at 362,597 billion

U.S dollars in 2019, which was an indication of positive growth, the company lost traction in

2020 and closed the year with a decline in its total assets registering only 332, 750 billion U.S

dollars. This decrease in total assets does not, however, mean that the company is struggling in

some way. Current assets, which form part of the total assets, are liquid and can be sold within a

short period of time or exchanged with other assets, and therefore just changing position in the

books of account.

The amounts the company owed its vendors and suppliers for goods delivered to them,

also known as Accounts payables, stood at 3,725 billion U.S dollars by the end of its 2019

financial year. This was an increase of 60.49 percent from the previous financial year, implying

that the company’s business was sustained by others. This figure declined to -7.142 billion U.S

dollars at the close of the 2020 financial year, representing a 291.73 percent decline in

comparison to the figures of 2019.

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ExxonMobil’s short-term financial obligations or total current liabilities closed the 2019

financial year at 63,989 billion U.S dollars, an increase from the previous year. The value of total

current liabilities, however, declined in the 2020 financial year to close at 53,363 billion U.S

dollars implying that the company met most of its short-term financial obligations in 2020 and

operated using its own funds for its business activities.

The company’s total liabilities stood at 163,659 billion U.S dollars by the end of the 2019

financial year representing 45.14 percent of the company being funded by debt. The figure of

total liabilities increased to 168,620 billion U.S dollars at the end of the 2020 financial year

representing 50.67 percent debt funding. The company’s total shareholders’ equity stood at

191,650 billion U.S dollars at the end of the 2019 trading period and decreases to 157,150 billion

U.S dollars by the end of the 2020 financial year. The total shareholders’ equity values

represented 52.85 and 47.23 percentage funding of the company by shareholders in 2019 and

2020 respectively. From this, one can deduce that in 2019, the value of the company that was

financed by the ordinary or preference shares of the shareholders was about 47 percent, and this

financing from the shareholders’ increased to stand at about 52 percent in 2020.

References

Skjærseth, J. B. ExxonMobil. https://www.files.ethz.ch/isn/95209/FNI-R0703.pdf

WSJ Markets https://www.wsj.com/market-data/quotes/XOM/financials/annual/balance-sheet