Analysis Between Exxon Mobil And Royal Dutch Shell

In the present clip, Fuel is a one sort of major factors that people have to utilize in the pillar of day-to-day life. For blink of an eye, the most of import thing is transit, electronic merchandise. It can non be denied that these are rather of import for the universe turning economic systems. There are many rivals in term of production of gas and crude oil merchandise and power selling such as fuel motor and lubricators. In add-on, there are two large companies in the universe which are Exxon- Mobil and Royal Dutch Shell. These companies have invested in many states that have the fuel resources. The point of this study, the investor demand to cognize a right analyze informations which is fiscal accounting before investing. This paper will advice in the hereafter long term investing in term of the fuel and oil industry between Exxon-Mobil and Royal Dutch Shell. Both companies use the fiscal information to supply in the Exxon-Mobil one-year study and Royal Dutch one-year study which is consist of ratios, analyze and measure the public presentation of both companies over 2005-2007. This paper will analyse and compare the public presentation of both companies, besides the strong and weak country in each company, and high spot of restriction of performed analysis and recommendation as to the investing.

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Exxon- Mobil

Overview

Exxon-Mobil is the 1 of the universe biggest company in term of the oil and fuel production. They has concerned in every factors of the production, geographic expedition and supply concatenation. Furthermore, they are the chief maker and particular of crude oil, besides they focus on the long term to all portion of concern. The company have merchandise operation in 24 states around the universe. Exxon-Mobil have located in 21 states

and the merchandise more than 32,000 retail service station. In 2007, they can sell the crude oil merchandise were 7.1 billion barrels per twenty-four hours. Exxon-Mobil is the one the universe provider under the name of Exxon, Esso and Mobil.

Analyze public presentation of Exxon Mobil

Millon of

dollars

Year

2005

2006

2007

2006/2005

2007/2006

Gross

339,938

347,254

372,824

102 %

107 %

Cost of gross revenues

212,038

212,074

231,383

100 %

109 %

Gross Net income

127,900

135,180

141,441

106 %

105 %

NPBIT

59,432

67,402

70,474

113 %

105 %

Net Net income

36,130

39,500

40,610

109 %

103 %

Stockholders Equity

111,186

113,844

121,762

102 %

107 %

Gross and Shareholders Equity has bit by bit increase from 2005 to 2006 by 2 % and from 2006 to 2007 by 7 %

Cost of gross revenues besides has increase steadily over the twelvemonth, but the cost of gross revenues raise 9 % in 2006 more than in first twelvemonth.

Gross net income has increase steadily from 2005 to 2007 by 6 % .In contrast, gross net income has down 1 % in 2006

Net net income has increase steadily over the twelvemonth by 9 % in the 2nd twelvemonth and drop down y 3 % in 3rd twelvemonth.

Millon of

dollars

Year

2005

2006

2007

2006/2005

2007/2006

Capital

111,186

113,844

121,762

102 %

107 %

Current liabilities

46,307

48,817

58,312

105 %

119 %

Long term liabilities

50,842

56,354

62,008

111 %

110 %

Capital is lifting steadily over the twelvemonth

Current liabilities have increase strongly by 19 % in the 3rd and drop down in 2nd twelvemonth.

Long term liabilities are lifting strongly in 2nd twelvemonth and a spot lessening merely 1 % in 3rd twelvemonth

Millon of

dollars

Year

2005

2006

2007

2006/2005

2007/2006

Current Asset

73342

75777

85963

103 %

113 %

Fixed Asset

134993

143238

156119

106 %

109 %

Entire Assetss

208335

219015

242082

105 %

111 %

Fixed assets are lifting steadily over the twelvemonth

Current assets and entire assets has addition strong in the 3rd twelvemonth but they drop down

Millon of

dollars

Year

2005

2006

2007

2006/2005

2007/2006

Net hard currency flow from operating

48138

49286

52002

102 %

106 %

Net hard currency flow from puting activities

-10720

-14230

-9728

133 %

68 %

Net hard currency flow from funding activities

-26941

-36210

-38345

134 %

106 %

The Net hard currency flow from operating activities has increase steadily during the period

Net hard currency flow from puting activities and net hard currency flow from funding activities rise significantly in the 2nd twelvemonth and drop down significantly in the 3rd by 68 %

Performance Ratio ( Profitability )

2005

2006

2007

2006/2005

2007/2006

Gross Profit ratio

38 %

39 %

38 %

103 %

97 %

Net income ratio

17 %

19 %

19 %

111 %

97 %

Tax return on capital employed ( ROE )

22 %

23 %

22 %

104 %

93 %

Tax return on plus ( ROA )

17 %

18 %

17 %

104 %

93 %

Gross net income ratio has every bit in 2005 and 2007 but merely 1 % addition in 2006

Net income ratio is increasing in the period by 13 % in2006 and drop 4 % in 2007

ROE lift 4 % in 2006 and steady in 2005 and 2007

ROA has increase steady over the twelvemonth

Liquidity Ratio

2005

2006

2007

2006/2005

2007/2006

current ratio

1.58

1.55

1.47

98 %

95 %

Quick ratio

1.38

1.33

1.28

96 %

99 %

In liquidness of the company it can analyse that they are able to pay for the liabilities

Current ratio has decrease steadily over the period

Quick ratio is precisely the same per centum by 96 % in 2006 and 2007

Gearing debt ratio

2005

2006

2007

2006/2005

2007/2006

debt ratio

47 %

48 %

50 %

103 %

104 %

The debt ratio of this company is more than 40 % which means the company has the external funding, it increasing bit by bit over the period by 7 % , 8 % and 10 % . Thus the state of affairs of company are rather safe.

Efficiency Ratio

2005

2006

2007

2006/2005

2007/2006

Receivable yearss

28

29

34

103 %

118 %

Creditors yearss

62

67

71

108 %

106 %

Inventory yearss

16

18

17

115 %

95 %

-The receivable yearss of this company is good because they can roll up money with in monthly over the first two old ages but somewhat up in 34 yearss in 2007

– The company has a short clip to pay the debts merely over 60 yearss in 2005 and 2006 and lifting over 70 yearss in 2007

– The stock list turnover has increase by 16 yearss in 2005 and 18 yearss in 2006, somewhat drop down merely 17 in the last twelvemonth

Investor Ratios

2005

2006

2007

2006/2005

2007/2006

Gaining per portions

5.77

6.68

7.36

116 %

110 %

Dividend per portions

1.15

1.29

1.38

113 %

107 %

Dividend screen

5.03

5.18

5.33

103 %

103 %

The earning per portions increase by 16 % in 2006 and diminish by 10 % in 2007

The dividend per portions is lifting steadily over the period

The dividend screen addition by 3 % in 2006 and 2007

General remarks

The dividend per portions and the dividend screen are lifting

The receivable yearss of this company is rather good and besides have a short clip to pay the debts

The company ‘s liquidness is good, there is non a job in the hazard state of affairs

The strong and weak country of Exxon – Mobil

The strong and weak country is really of import of the company. It indicates that the state of affairs of company how it is.

The strong country of Exxon Mobil is profitableness which is addition of gross net income by 39 % in 2006 and gross revenues addition from $ 358,955 to $ 390,328 during the period. Following, plus construction is another strong country which is addition from $ 208,335 in 2005 up to $ 242,082 in 2007. Gross is increasing steadily from 339,938 in 2005 up to 372,824 in 2007.Then, liquidness is a strong country of Exxon Mobil because current plus has increase by 13 % it means company are able to pay for the liabilities.

Efficiency is a strong country because they take short clip to roll up the money, besides stock list ( stock ) it is non in stock for long clip. The other thing is investor is important addition over the period. The weak country of Exxon is a geartrain, it over 40 % in each twelvemonth, which means company hold to be cognizant of increasing of pitching which means increasing of hazard.

Royal Dutch Shell

Overview

Presents, Energy in one of the of import factors in the chief life. Due to economic universe has expanded to over the universe. It can non be denied that population must utilize the energy in many ways which is including transit, electricity and energy.

Shell Company is the international and planetary company and allotment in well-known for production of Fuels Gas and Energy. Shell has successful in concern around the universe. The concern lines of Shell Company included gas Chemical, and fuel. The company intent is aim to acquire the net income from oil, gas, chemical line. The company can bring forth oil at 11.9 billion barrels. Most of operation topographic points are locates at Nigeria, Oman. Royal Dutch Shell has a large undertaking in Alberta Oil Sands.

Analyze public presentation of Royal Dutch Shell

Million of dollars

Year

2005

2006

2007

2006/2005

2007/2006

Gross

306,731

318,845

355,782

104 %

112 %

Cost of gross revenues

252,622

262,989

296,697

104 %

113 %

Gross Net income

54,109

55,856

59,085

103 %

106 %

NPBIT

44,567

44,628

50,576

100 %

113 %

Net Net income

26,261

26,311

31,926

100 %

121 %

Stockholders Enquity

90,924

105,726

123,960

116 %

117 %

The gross is lifting steadily over the period

The cost of gross revenues besides increasing steadily over the period by 13 % in 2007

Gross net income increasing steadily over the period

Net net income addition significantly in 2007 by 21 % and unluckily drop down by 0 % in 2006

Million of dollars

Year

2005

2006

2007

2006/2005

2007/2006

Capital

90,924

105,726

123,960

116 %

117 %

Current Liabilitiess

84,964

76,748

94,384

90 %

123 %

Long term liabilities

36,628

43,583

49,118

119 %

113 %

Capital is lifting steadily over the twelvemonth

Current and long term liabilities is increasing steadily over the twelvemonth but the different thing is current liabilities is rather high by 23 % in 2007 and long term liabilities drop from 19 % to 13 %

Million of dollars

Year

2005

2006

2007

2006/2005

2007/2006

Current Asset

97,892

91,885

115,397

94 %

126 %

Fixed Asset

121,624

143,391

154,073

118 %

107 %

Entire Assetss

219,516

235,276

269,470

107 %

115 %

Current plus increased over the twelvemonth particularly in the 3rd twelvemonth

Fixed plus is increasing steadily over the twelvemonth but bead down by 7 % in 2007

Millon of Dollar

Year

2005

2006

2007

2006/2005

2007/2006

Net hard currency flow from operating

30,113

31,696

34,461

105 %

109 %

Net hard currency flow from puting activities

-8,761

-20,861

-14,570

238 %

70 %

Net hard currency flow from funding activities

-18,573

-13,741

-19,393

74 %

141 %

The net hard currency flow from operating is increasing over the twelvemonth

Net hard currency flow from puting activities is really strong escape

Net hard currency flow from funding activities is important by 41 % in 2007

Performance Ratio ( Profitability )

2005

2006

2007

2006/2005

2007/2006

Gross Profit ratio

18 %

18 %

17 %

99 %

95 %

Net income ratio

15 %

14 %

14 %

96 %

102 %

Tax return on capital employed ( ROE )

21 %

18 %

18 %

86 %

105 %

Tax return on plus ( ROA )

12 %

11 %

12 %

93 %

106 %

The profitableness of company is a spot lessening from to 2006 to 2007

Net income ratio has steady by 18 % in 2006 and 2007

ROE addition significantly by 21 % in the first twelvemonth and drop down

ROA is lifting by 9 % in 2007

Liquidity Ratio

2005

2006

2007

2006/2005

2007/2006

current ratio

1.15

1.20

1.22

104 %

102 %

speedy ratio

0.92

0.89

0.89

97 %

99 %

Current ratio is lower than 1.5 that agencies company is in the problem, will non be able to pay liabilities

Quick ratio is about 1 % over the twelvemonth

Gearing debt ratio

2005

2006

2007

2006/2005

2007/2006

debt ratio

55 %

51 %

53 %

92 %

104 %

The debt ratio is more than 40 % is increasing by 15 % in 2005 and diminish by 11 % in 2006. Company need to be cognizant as an increasing of debt ratio

Efficiency Ratio

2005

2006

2007

2006/2005

2007/2006

Receivable yearss

79

68

76

86 %

112 %

Creditors yearss

100

87

93

87 %

107 %

Inventory yearss

29

32

39

113 %

120 %

– The collect of payment is over 70 yearss, it drop down in 2006

Company has rather long clip to pay the debts for 100 yearss, drop down 87 in 2006, it increase once more 94 yearss in 2007

The stock list turnover is increasing by 6 yearss in 2007 and decreased 7 yearss in 2006

Investor Ratios

2005

2006

2007

2006/2005

2007/2006

Gaining per portions

3.79

3.97

5.00

105 %

126 %

Dividend per portions

1.52

1.23

1.41

81 %

115 %

Dividend screen

2.49

3.23

3.55

130 %

110 %

Gaining per portions is increasing steadily in 2005 to 2006 and significantly in 2006 by 26 % , and dividend screen are lifting over the twelvemonth.

Dividend per portions increase by 15 % in 2007

General remarks

The profitableness of company is non much over the period

Gaining per portions is increasing

The liquidness is on lower than the criterion ratio which means company is an the problem

The ability of payment it take clip to pay for it

The strong and weak country of Shell

The strong and the weak country of company is truly of import because it can demo the position of the company.

The weak country of Shell is liabilities increased from 121,592 in 2005 up to 143,502 in 2007, it average at 19 % . The profitableness ratio of Shell is another weak country because gross net income bead down from 18 % to 17 % in 2005 to 2007. In add-on, return on capital employed decreased from 21 % to18 % during the period which means company can non do more net income every bit good as in gross net income besides drop down. Furthermore, the sum of creditors had raised dramatically by 21 % and figure of ordinary portions decreased over the period. Another weak country is stock list is lifting over the twelvemonth significantly by 36 % . The weakest country of Shell company is liquidness, it

below than standard bound which means company is in the problem, they are non be able to pay for liability. The geartrain is besides weak country because more than 50 % which is company has an external funding. It non good for company position. Company need to be careful of increasing pitching mean to increasing hazard. Efficiency is another weak country is 79 yearss in 2005, it rather long clip to acquire money. The strong country of Shell is investors ratio is lifting over the twelvemonth.

Comparisons between Exxon and Shell

Profitability – Exxon is better than Shell, by gross net income of Exxon is higher than Shell it increased 39 % in interim Shell has merely 18 % of gross net income. Following, return on capital employed Exxon norm at 22 % over the twelvemonth whereas Shell is diminishing over the twelvemonth.

Liquidity – Shell is worse than Exxon which means Shell is in the problem, company are non be able to pay liabilities. In the interim, Exxon is good at current ratio, there is non job to pay for liabilities.

Gearing – Both companies are over 40 % of the debts. The of import thing is Shell is worse than Exxon because company has debt ratio more than 50 % which is rather and non truly good for the company.

Efficiency – Exxon is better than Shell in term of receivable, Exxon can acquire money quicker than Shell in short clip besides creditors Exxon have clip to payback if comparison when company acquire the money whereas Shell take 79 yearss to acquire money and has short clip to payback if comparison when company receive.

Investors ratios – Exxon is better than Shell in gaining per portions because it is increasing over the period by more per centum

The restrictions of performed analysis

The analysis of fiscal is hard when it has limited performed in concern. There

are many restrictions it depends on the fiscal policy of the company. First, it bases on the historical cost of the company and besides accounting policy in different company.

For illustration, stock list there are several of record in each company. The restrictions of both companies are a twelvemonth period comparing. In term of concern, it non good to look at information in short clip because it compare in recent twelvemonth from 2005 to 2007.In point of position of investors, they need to put in the long term. Therefore, investors need more information about fiscal analysis, hazard of investing before they invest.

Another thing is currency because it is of import for the investors in term of concern. Due to the currency has the consequence to the fiscal balance statement, investors must see carefully and should vision position to gauge in the long term investing.

Recommendations to investing potency

When investors want to make the concern, they have to believe carefully about the fiscal analysis of that merchandise. In term of investor ‘s point of position is profitableness. How much of this company can do the net income. This class work will urge the Exxon company to put in long term period, which is increasing of doing the net income over the twelvemonth from 2005 to 2006. In add-on, gaining per portions and dividend per portions are increasing over the period particularly in gaining per portions is rather high. Another thing is liquidness which means Exxon have ability to pay for the liabilities. Furthermore, Exxon have a good at receivable, it does non take long clip to acquire the money whereas the company have clip to pay for the creditors increased over the twelvemonth every bit good as stock list it is short clip to maintain it in stock.

As mentioned it earlier, investors can see that how good of Exxon is, and fiscal statement analysis. It will non be surprised that investors will put in this company and another ground for investors who interested in this sort of concern is it could be turning up in the hereafter.

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