This is an independent review of the financial performance of top US based Oil Multinationals, Exxon Mobil and Chevron for the year 2014.

1. EXXON MOBIL v CHEVRON
A REVIEW OF COMPARATIVE PERFORMANCE IN 2014.
INTRODUCTION
The Oil and Gas industry has gone through one of the most unprofitable periods this 2015. With oil
price dropping so low to $45-$49 and remaining on this range for about 9 months is serious concern
for all stakeholders in the Industry worldwide. Many analysts have argued that this is the worst oil
slump since 45years but amidst this setback there is this belief that better days are ahead.
In the Industry generally, earnings are down, leading some large corporations to decommission more
than half their rigs and cut investments in exploration and production. Some companies have
decided to downsize their workforce leading to more than 200,000 oil workers losing their jobs.

2. Today we want to review the financial performance of two US oil giants Exxon Mobil and Chevron in
2014. This is to enable stakeholders get a better understanding of the financial position of these two
firms as at year end 2014,compare their performances during this period and given the current
economic circumstances the industry is in currently, be able to visualize the financial expectations
from these companies as the year runs out.
The outlook and results expected from this multinationals will be largely dependent on past
performances (which we are going to analyze here), current financial and operational strategies
applied to mitigate the effect of the oil price fall, their supply capacity and global market share of
these companies.
This analysis is independent one and all statements therein should be seen as unbiased and
objective, but that does not imply that it is sacrosanct, unquestionable or devoid of immaterial error.
The data used for this calculations and analysis was culled from the Annual Reports of these two
companies.
VITAL PERFORMANCE RATIOS BASED ON 2014 FINANCIAL STATEMENTS
Notes DESCRIPTION OF RATIOS Exxon Mobil Chevron
1 Return on capital employed(ROCE) 16.2% 15.4%
2 Net profit margin 13.1% 15.6%
3 Return on total assets(ROTA) 14.7% 11.6%
4 Inventory holding period 27days 20days
5 Trade receivable collection period 26days 30days
6 Inventory turnover 13.5times 18.3times
7 Trade Payables payment period 68days 58days
8 Asset turnover 0.91:1 0.88:1
9 Acid test ratio or Quick assets ratio 0.56:1 1.12:1
10 Current ratio 0.82:1 1.32:1
11 Cash ratio 0.07:1 0.4:1
12 Earnings per share(EPS) $7.0 $10.2
13 Dividend per share(DPS) $2.7 $4.32
14 Dividend payout ratio 35.5% 42.3%
15 Dividend cover ratio 2.8 2.36

3. 16 Proprietary ratio 51.8% 58.3%
17 Total debts ratio 48.2% 41.3%
OTHER KEY INDICES $millions $millions
A Sales Revenue 394,105 200,494
B Cost of Sales(Purchases) 225,972 119,671
C Profit for the year 33,615 19,310
D Profit before Tax 31,202
E Total Assets 349,493 266,026
F Total Equity 181,064 155,028
G Total Liabilities 168,429 109,835
H Non- current Assets 296,583 223,794
ANALYSIS OF THE FINANCIAL PERFORMANCE OF EXXON MOBIL COMPARED
TO CHEVRON FOR THE YEAR 2014.
OPERATING PERFORMANCE
The return on capital employed (ROCE) by Exxon Mobil is about 16.2% while that of
Chevron is 15.2%.By this standard of performance and profitability Exxon Mobil did
better than Chevron by 4.9% in 2014.This marginal advantage can also be buttressed
by the return on total assets which Exxon Mobil had a 14.7% and Chevron had an 11.7%
giving Exxon Mobil a 20% lead. In the aspect of Asset turnover, Exxon Mobil mustered
a 4% lead on Chevron. Though, Asset turnover was record low for both companies at
0.91 and 0.88 for Exxon Mobil and Chevron respectively.
Conversely, Chevron did better than Exxon Mobil on Net profit margin.15.6% against
13.1%, amassing an advantage of 16% implies that Chevron can generate more profit
from its sales revenue than Exxon Mobil. On the average it is clear that Exxon Mobil
has a marginal advantage over Chevron in terms of ability to generate returns from
assets and capital employed in 2014.
LIQUIDITY
The liquidity positions of both companies are very poor. One may argue it might be
connected to the nature of Industry they operate. Exxon Mobil s current ratio is
0.82:1 and Chevron has 1.32:1. This is far below the norm of 2:1. Chevron beats Exxon

4. Mobil by a 38% difference and this shows that Chevron has better financial flexibility
and capacity to take opportunities that require cash than Exxon Mobil.
Exxon Mobil s low liquidity may be accountable by the high trade payables
amounting $42,227 million and a direct consequence of the longer trade payables of
68days and may be a policy mandating debtors to pay on time which makes its trade
receivables period even shorter(26days) in order to shore up liquidity.
Chevron s liquidity position measured in quick assets was more favorable than that of
Exxon Mobil by 50% (1.21:1 and 0.56:1). Chevron s cash ratio was also better than that
of Exxon Mobil by 82.5% (0.4:1 and 0.07:1). We can therefore conclude that Chevron s
liquidity position in 2014 was better than that of Exxon Mobil.
GEARING
The total debt ratio of Exxon Mobil during the period under review was 48.2% against
Chevron s 41.3% showing a 14.3% difference. By implication Exxon Mobil had a higher
debt burden than Chevron and in connection o total assets, we can confidently say
that creditors of Chevron are more secure than those of Exxon Mobil in case of
Liquidation.
On gearing, both Companies have a very favorable gearing which is good for them.
OTHER INDICATORS
It is worthy to take a look at these two firms from the investor s point of view.
Having considered liquidity and profitability, many investors would be asking as a
shareholder what s in for me? Delivering the goods to the shareholders of the
Company is one of the primary goals of Board.
Exxon Mobil had earnings per share of $7.60 while Chevron had $10.21, a difference of
26.2% in favor of Chevron. The dividend per share for Exxon Mobil was $2.70 while for
Chevron it was $4.32 which meant that in 2014 actual returns on shareholders fund
was higher for Chevron s shareholders by 37.5% and finally the dividend payout for
Exxon Mobil was 35.5% while for Chevron it was 42.3% a clear indication that Chevron
paid out more of its current period earnings to its shareholders as dividends than did
Exxon Mobil.

5. From a shareholder s perspective Chevron did better than Exxon Mobil in 2014.
Sometimes it s not a straight line equation there may be crafted strategies used by
the Management of these companies to ensure long-term growth at the expense of
the short-term which may not be visible to stakeholders until it materializes.
CONCLUSION
It will take more than extra sensory perception to comprehensively understand what
happens in these large corporations with respect to finance, financing decisions and
performance. The annual financial statements is just a lead to financial performance,
the off-balance sheet items are there and so many other company specific factors
that has the propensity to reverse or neutralize predictions or analysis made based
on annual financial statements.
Still, we have confidence in SEC and other regulatory bodies especially in the US
where these two companies are quoted (NYSE). Having concluded this analysis we
expect a better performance from the Management of these two firms as we wait
for the financial statements for 2015 with the expectations of fall in Sales Revenue for
all Companies in the Industry. The ability of the Management of these firms to
effectively reduce cost of sales, administrative and distribution expenses and create
additional income will determine if they are going to make a profit or loss in this
bleak period 0f 2015.
WORKINGS (NOTES)
RATIOS EXXON MOBIL CHEVRON
1.ROCE=PBT/Capital+ reserves 16.2%(given) 31,202/202,860 x100 (15.4%)
2.NPM=PBT/sales 51,630/394,105 x 100 (13.1%) 31,202/200,494 (15.6%)
3.ROTA=PBT/Total assets 51,630/349,493 x100 (14.7%) 31,202/266,026 (11.7%)
4.IHP=AVI/Cost of sales x365 16678/225,972 x365 (26.9) 6,505/119,671 x 365 (20)
5.TRCP=ATR/Credit salesx365 28,009/394,105 x 365 (26) 16,736/200,494 x365 (30)
6.TPPP=ATP/Credit
purchasesx365
42,227/225,972x 365 (68) 19,000/119,671 x 365 (58)
7.Asset Turnover=sales/ loans 394,105/430,829 (0.91) 200,494/226,820 (0.88)
8.Acid test ratio=current asset-
inv/current liabilities
36,232/62,633 (0.56) 35,727/31,926 (1.12)
9.Current ratio= current
asset/current liabilities
52,910/62,633 (0.82) 42,232/31,926 (1.32)
10.Cash ratio: cash &cash 4,658/64,633 (0.07) 12,785/31,926 (0.4)

6. equivalents/current liabilities
11.EPS 7.60 (given) 10.21 (given)
12.DPS 2.70 4.32
13.Dividend cover
ratio=EPS/DPS
7.60/2.70 (2.8) 10.21/4.32 (2.36)
14.Dividend payout
ratio=DPS/EPSX100
2.70/7.60 x 100 (35.5%) 4.32/10.21 x 100 (42.3%)
15.Prop ratio=owners fund/total
assets
181,064/349,493 x100 (51.8%) 155,028/266,026 x100 (58.3%)
16.Total debts ratio=total
debts/total assets
168,429/349,493 x100 (48.2%) 109,835/266,026 x10 (41.3%)
17.Inventory turnover=cost of
sales/average inv.
225,972/16,678 (13.5) 119,671/6,505 (18.4)
REFERENCES
Annual Report 2014/Chevron (www.chevron.com/annualreport/2014)
How to Read financial Reports ---Merrill Lynch 2000
Summary Annual Report Exxon Mobil 2014
Teach yourself Group Accounts----Prince Casmir Idekwulim Lagos 2014
21 Reasons the US should adopt IFRS----Egege Justice 2015.
How the Rising dollar is causing Oil price fall----Market Realist
Prepared by
Egege Justice
Lekki, Lagos, Nigeria
+2348065122244, +2348177631932
Justice.egege@gmail.com.
20/10/2015.