Financial Analysis of Exxon Mobil Corporation Essay

3113 Words Jan 18th, 2010 13 Pages
This report consists of financial analysis of Exxon Mobil Corporation and it is based on the company annual report for the fiscal year ended December 31, 2006, on the company’s official documents placed at their website and on other appropriate sources. For convenience and simplicity, in this report the terms ExxonMobil, Exxon, Esso and Mobil, as well as terms like Corporation, Company, their and its, are sometimes used as abbreviated references to specific affiliates or groups of affiliates.
This report doesn’t include calculation of share’s fair value and potential of its growth in comparison with current market price, but analysis based recommendation for Exxon Mobil shares is made in the report conclusion.
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The operating revenue increased by 1.8% (or $6 512 million) to $365 467 millions (please see Exxon Mobil Corporation financial statements attached as Appendix 1).
The growth rate of revenues dropped significantly in 2006 from increase in 2005. As the company production volumes were increased at the same rate these years, the main reason is a change in world gas and oil prices.
Net income in 2006 of $39 500 million was the highest ever for the Corporation, up $3 370 million from 2005. The company states that net income for 2006 included a $410 million gain from the recognition of tax benefits related to historical investments in non-U.S. assets. It should be stated that Exxon Mobil management is quite good in expenses control. They decrease SG&A expenses in 2006 and reduced total number of employees all this period.
As it can be seen above average capital employed also rose up, as a result of significant growth of company assets. ROCE increased from 31.3% to 32.2% due to increase in net profits.
Exxon Mobil’s results in comparison with other traded oil and gas giants show a very good position of the company (Figure 2). The corporation has greatest capitalization and rates highly among the investors. Profitability level of company is slightly less than average level of industry, but this difference exists only because of impact of rapidly growing companies

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