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Financial Condition Assessment  Final
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  • Both Chevron and ExxonMobil operate today, but are mindful of the future, factoring things such as: World Pop growth: -8 Billion people estimated for world pop in 2030 -over 50% of growth from developing nations -reliable, affordable, cleaner energy will be sought out -60% increase in energy demand in 2030 (compared to 2000) 2. Contrary to public belief, more than adequate oil and natural gas supplies exist: -oil is the transportation fuel of choice, and will remain so for decades to come -estimated liquid energy demand by 2030 is 115 million barrels/day. Resources abound 3. Assets are in place: -operations in over 180 countries -Not a 5 year plan, more like a 25 year plan! -expensive land and production assets and infrastructure dictate a farther look into the future -long distance view ignores short-term trends -continued upstream exploration operations 4. Technological advances: -deep water drilling down to over 28,000 feet! -oil shale, heavy oil refining techniques will unlock proven reserves potential -GTL (gas to liquids) technology ex. Converting natural gas to ultraclean diesel fuel -energy efficiency 5. Alt energy sources coming on line: -biofuels -solar -wind -geothermal
  • 1. -Both Chevron and ExxonMobil outperformed the S&P500 in terms of EPS growth -bordering 30% 2. -Effective management of global organizations. -High ROI reinforces the true stocks’ values -Chevron: -ROI: 22.9% -ROE: 24.6% -ROA: 12.9% -Exxon: -ROI: 30.8% -ROE: 32.6% -ROA: 18.0% -Chevron’s ROA and ROE outperformed S&P500 by almost 10% last year -Exxon’s ROA and ROE outperformed S&P500 by over 2:1 last year 3. -Chevron had 19 years straight of dividend increases -ExxonMobil had an 8.9% div increase over the past 3 years
  • 1. -Chevron’s sales growth increased by 19.9% over 3 years -Exxon’s sales growth increased by 15.2% over 3 years Both profit margins and ROE margins should be positively affected 2. Beta = stability Beta compares stock to the S&P500. S&P500 is a composite of large cap stocks, thought to reflect the market as a whole, thus measuring the US economy. 3. February 1, 2008 both will announce Q4 2007 EPS figures. That’s tomorrow!
  • IN CONCLUSION: -Chevron and ExxonMobil are not just “Big oil.” They are the arbitors of world development and growth -Both companies look far into the future and plan accordingly for change -Both companies emphasize world energy growth and efficiency as main objectives to conquer -Both companies have strong financials, are stable and tend to operate in a low profit-high volume manner -Our team conveyed 6 critical pieces of information offered as consideration for investment THANK YOU FOR YOUR TIME QUESTIONS?

Financial Condition Assessment  Final Financial Condition Assessment Final Presentation Transcript

  • Financial Condition Assessment: Chevron Corp and ExxonMobil Marc Kirkland – Revenues and income changes Dan Dyer – Ratios and benchmarks Neil Sinay – Core competencies and improvements Matt Ellis – Investment considerations
  • Cash Generated-Chevron (2004-2006)
    • Operating
      • Accounts Receivable
      • Other Liabilities
    • Investing
      • Fixed Assets
      • Investing Activities
    • Financing
      • Retirement Stock
      • Dividend Payout
  • Cash Generated- Exxon (2004-2006)
    • Operating
      • Accounts Payable
    • Investing
      • Fixed Assets
      • Treasury Stock
    • Financing
      • Dividend Payout
      • Retirement Stock
  • Total Revenue
    • Chevron
    • 2004- $155.3 Billion
    • 2005- $198.2 Billion
    • 2006- $210.1 Billion
    • 73% Increase
    • Exxon
    • 2004- $298 Billion
    • 2005- $370.6 Billion
    • 2006- $377.6 Billion
    • 79% Increase
  • Chevron Corp Ratios
    • Avg collection period
    • 2004 16.27 days
    • 2005 17.38 days
    • 2006 17.22 days
    • Return on assets
    • 2004 15%
    • 2005 12%
    • 2006 13%
    • Total debt
    • 2004 51%
    • 2005 50%
    • 2006 48%
    • Profit margin
    • 2004 9%
    • 2005 7%
    • 2006 8%
  • ExxonMobil Ratios
    • Avg collection period
    • 2004 31.06 days
    • 2005 27.06 days
    • 2006 27.97 days
    • Return on assets
    • 2004 14%
    • 2005 18%
    • 2006 19%
    • Total debt
    • 2004 48%
    • 2005 47%
    • 2006 48%
    • Profit margin
    • 2004 8%
    • 2005 10%
    • 2006 10%
    • How do Chevron and ExxonMobil plan for alternative energy sources?
    • Chevron-Energy for the Future
    • ExxonMobil-Tomorrow’s Energy
    Benchmarking
  • Organizational Strengths
    • Chevron Corp
      • 15% average increase in dividends over the last 3 years
        • Increase in dividends for 19 straight years
      • Strong Earnings-Per-Share growth
        • Almost 30% growth over last 3 fiscal years
      • Strong returns
        • 22.9% ROI
        • 24.6% ROE
        • 12.9% ROA
      • Sales growth increased 19.9% over last 3 fiscal years
      • Beta Factor – 0.71
        • Measure of individual stock volatility, the propensity of the stock’s price to fluctuate
      • Strong EPS estimated for 2007 – Roughly $8.43
  • Organizational Strengths
    • ExxonMobil
      • 8.9% average increase in dividends over the last 3 years
      • Strong Earnings-Per-Share growth
        • Almost 30% growth over last 3 fiscal years
      • Strong returns
        • 30.8% ROI
        • 32.6% ROE
        • 18.0% ROA
      • Sales growth increased 15.2% over last 3 fiscal years
      • Beta Factor – 0.77
        • Measure of individual stock volatility, the propensity of the stock’s price to fluctuate
      • Strong EPS estimated for 2007 – Roughly $7.10
    • Improvements:
      • Few financial weaknesses in either company
      • Optimize use of energy
      • Invest more in renewable energy sources
    • Suggestions:
      • Both companies are solid investments
        • Year over year dividend growth
        • Solid stock volatility ratings
    Improvements and suggestions
  • Embrace the future: the energy of change
    • Population growth consideration
    • Oil is the engine of economic growth world wide
    • Assets are in place
    • Technological advances
    • Alternative energy sources coming on line
    • Strong EPS figures and EPS growth over the past 3 fiscal years
    • Operational effectiveness evidenced by ROI, ROE and ROA
    • Dividend increases
    To invest or digress…
  • To invest or digress…
    • Excellent sales growth over the past 3 fiscal years
    • Volatility and the beta factor
    • 2007 Q4 reports right around the corner
    Volatility Chevron 0.71 ExxonMobil 0.77 S&P500 1.00
  • In conclusion
    • Corporations such as Chevron and ExxonMobil provide the basic building block of the United States economy and other world economies
    • Petroleum allows economies to grow over time and avoid stagnation