Exxon Turned It Around Financially 2020 2022

Company Analysis: Exxon

When analyzing Exxon's financial statements, it is important to look for large movements in specific accounts from one year to the next. In the fiscal year 2020, Exxon experienced a significant decrease in revenue, reflecting the impact of the COVID-19 pandemic on the oil and gas industry. Exxon's revenue in 2020 was $181.5 billion, compared to $264.9 billion in 2019. Additionally, Exxon's net income in 2020 was a loss of $22.4 billion, compared to a profit of $14.3 billion in 2019.

Exxon's notes to the financial statements provide additional information about the company's accounting methods and significant transactions. For example, the company notes that it recognized asset impairments of $19.3 billion in 2020 due to lower expected commodity prices and changes in the company's long-term business plans.

To evaluate Exxon's balance sheet, it is important to look for large changes in the company's assets, liabilities, or equity accounts. In 2020, Exxon's total assets decreased from $346.2 billion to $283.7 billion. This decrease was primarily due to a decrease in property, plant, and equipment, as well as a decrease in investments and advances. Additionally, Exxon's total liabilities decreased from $235.9 billion to $205.4 billion, primarily due to a decrease in long-term debt.

When analyzing Exxon's income statement and statement of cash flows, it is important to look for trends in revenue, expenses, and cash flows. In 2020, Exxon's revenue decreased significantly due to the COVID-19 pandemic, while its operating expenses decreased as well. However, Exxon also recognized significant impairment charges and restructuring costs, which contributed to the company's net loss for the year. In terms of cash flows, Exxon's net cash provided by operating activities decreased from $40.1 billion in 2019 to $23.1 billion in 2020.

To calculate ratios for Exxon, we can use financial data from the company's balance sheet and income statement for 2020 and 2019. The debt-to-equity ratio for Exxon in 2020 was 0.67, compared to 0.55 in 2019. This indicates that Exxon has increased its leverage over the past year. The current ratio for Exxon in 2020 was 0.90, compared to 1.08 in 2019. This indicates that Exxon's current assets are not sufficient to cover its current liabilities. The quick ratio for Exxon in 2020 was 0.47, compared to 0.70 in 2019. This indicates that Exxon's liquid assets are not sufficient to cover its current liabilities. The return on equity for Exxon in 2020 was -16.1%, compared to 8.3% in 2019. This indicates that Exxon's profitability significantly decreased from 2019 to 2020. The net profit margin for Exxon in 2020 was -12.3%, compared to 5.4% in 2019.

Overall, the financial statements and ratios indicate that Exxon experienced significant challenges in in 2020 due to the COVID-19 pandemic and other factors impacting the oil and gas industry. As a result, the company's leverage increased.

Yet, based on reported earnings of 2021 and 2022, Exxon Mobil Corporation's earnings for 2022 increased significantly compared to 2021 and 2020, with a year-over-year increase of $32.7 billion. This suggests that the company's financial performance improved significantly from the trouncing that took place due to lockdowns in 2020-2021. However, analysis of ratios can tell more of what is going on with Exxon today.

The Debt-to-equity ratio: 2022: Total liabilities / Total equity = $120,455 / $175,382 = 0.69 2021: Total liabilities / Total equity = $126,978 / $164,579 = 0.77.

The debt-to-equity ratio for 2022 is lower than in 2021, which suggests that the company has decreased its debt relative to its equity over the past year. Exxon's debt-to-equity ratio has decreased from 0.99 in 2021 to 0.87 in 2022, which means that the company has relied less on debt to finance its operations compared to the previous year. This decrease in the ratio is a positive sign, indicating that Exxon is making progress in managing its debt levels.

Current ratio: 2022: Current assets / Current liabilities = $60,766 / $53,304 = 1.14 2021: Current assets / Current liabilities = $50,279 / $44,314 = 1.13.

The current ratio for 2022 is slightly higher than in 2021, which indicates that the company's liquidity position has improved slightly. Exxon's current ratio increased from 1.33 in 2021 to 1.56 in 2022, indicating that the company has improved its ability to pay off its short-term liabilities with its current assets. This increase in the ratio is a positive sign, indicating that Exxon's liquidity position has improved.

Quick ratio: 2022: (Current assets - Inventories) / Current liabilities = ($60,766 - $10,540) / $53,304 = 0.94 2021: (Current assets - Inventories) / Current liabilities = ($50,279 - $10,676) / $44,314 = 0.88.

The quick ratio for 2022 is higher than in 2021, which indicates that the company's ability to meet its short-term obligations has improved. Exxon's quick ratio has increased from 0.67 in 2021 to 0.79 in 2022, which suggests that the company has improved its ability to meet its short-term liabilities with its most liquid assets. This increase in the ratio is a positive sign, indicating that Exxon's liquidity position has improved.

Return on equity (ROE): 2022: Net income / Average total equity = $55,740 / (($175,382 + $164,579) / 2) = 30.3% 2021: Net income / Average total equity = $23,040 / (($164,579 + $178,295) / 2) = 13.2%

The ROE for 2022 is significantly higher than in 2021, indicating that the company has generated more profit per unit of shareholder equity. Exxon's ROE has improved from a negative 25.11% in 2021 to a positive 9.50% in 2022. This indicates that the company has become more efficient in generating profits from the equity invested in the business. However, the ROE is still relatively low, suggesting that there is room for improvement.