This paper presents a comparative analysis of Exxon Mobil's financial statements for 2011 and 2012. The review examines total assets and capital, current and fixed assets, accounts payable, and income statement performance. Key findings include a $2,743 million increase in total assets in 2012, a decrease in accounts payable from $57,067 million to $50,728 million, and a 9.3 percent increase in net income reaching $44,880 million in 2012. The analysis demonstrates the importance of financial statement review for investors, creditors, employees, and other stakeholders in assessing company financial health and making informed decisions.
Conducting analysis of balance sheets is beneficial for financial institutions, investors, share brokers, investment bankers, and other stakeholders. This comprehensive analysis provides stakeholders with indicators of the company's overall financial health and is considered a key factor in making investment decisions. The following review details the comparative performance of 2011 and 2012 for Exxon Mobil, examining how financial metrics shifted across these periods.
Total assets and capital are the first areas reviewed on the balance sheet. Total assets are comprised of fixed and current assets, usually representing a significant figure in the balance sheet. The total assets for Exxon Mobil in 2012 were $333,795 million, of which current assets totaled $64,460 million, with the remaining figure representing fixed assets. The reported figures of current and fixed assets reflect value and are therefore vital to the company.
Transparent accounting is an important factor, as investors often determine loan eligibility based on total assets. Maintaining sufficient assets is crucial to reducing business risks and vulnerabilities. Fixed assets, such as computers, can minimize the risk of losing company records while increasing efficiency. Patents and copyrights are intangible assets that protect companies against competitors. Current assets are turned over to generate cash flow, with inventories converting to final products sold to generate revenue. The cash is then used to purchase raw materials and pay wages. Asset management is important to day-to-day operations.
In 2011, the balance sheet reflected total assets of $331,052 million, which is $2,743 million less than 2012. The increase in total assets for 2012 was a direct result of Exxon Mobil acquiring property, plants, and equipment. Further asset analysis of individual components for 2012 reveals that the prominent current assets—cash, restricted cash, and cash equivalents—summed to $9,923 million. According to Kimmel, Weygandt, and Kieso (2009), cash includes cash on hand and demand deposits, whereas cash equivalents are short-term, highly liquid investments that are readily convertible to a known amount of cash. Norton, Diamond, and Pagach (2006) clarified that restricted cash and cash equivalents are kept aside for separate purposes, such as dividends and facility expansion, and can only be used for the stated purpose.
Accounts payable is another important element of the balance sheet. In 2012, Exxon Mobil had accounts payable of $50,728 million, compared to $57,067 million at the end of the 2011 annual reporting period. The decrease in accounts payable reflects that the company settled its outstanding liabilities in 2012 by paying creditors, as shown on the cash flow statement. This reduction demonstrates improved liquidity management and timely debt servicing.
Income statements present the total income and expenditure of a company. By reviewing the income statement, one can identify the sources of a company's revenue and where the money is spent. This helps identify areas in which substantial revenue is being spent and enables corrective action if required. The income statement of Exxon Mobil shows that net income in 2010 was $30,460 million, which increased to $41,060 million in 2011, and increased by 9.3 percent in 2012, reaching $44,880 million. In 2012, net income increased by $3,820 million compared to 2011.
A comparison of 2010 and 2011 income statements reflects that both revenue and expenditures increased in 2011, which increased net income. However, the comparison also reveals a decrease in 2012 revenue. Despite this, net income increased in 2012 due to a decrease in expenditure relative to 2011, demonstrating improved operational efficiency and cost management.
The total current assets for the annual reporting period ending December 31, 2012, totaled $64,460 million. This includes the sum of cash, cash equivalents, notes receivable, accounts receivable, and inventories. The previous annual reporting period ending December 31, 2011, showed $72,963 million, reflecting greater figures for cash, notes, accounts payable, and inventories in comparison to the recent annual reports.
All the information provided is equally important for all stakeholders of Exxon Mobil. The total asset position illustrates the company's potential to invest and perform in the future, helping identify the company's strength relative to the liabilities it holds. On the other hand, cash on hand reflects the liquidity position, indicating sufficient cash to support the company's future cash needs. Revenue illustrates the overall performance of the company and its operational quality.
The current assets position reveals whether companies can finance short-term cash needs through short-term assets. Investors focus on better returns through their investments and work at their best to achieve the desired future position. Employees need to know about the current financial position of the company to secure their jobs and career paths. Other stakeholders—such as creditors and debtors—have major concerns about the company's financial health and must maintain transactions according to it. Various lending institutions should always be aware of the company's financial position to secure debt and continue relationships with clients in the future.
This information is important to all investors, employees, and other stakeholders of the organization. The comprehensive financial analysis of Exxon Mobil demonstrates how balance sheet and income statement data inform decisions across multiple constituencies, from capital allocation to employment stability and creditor risk assessment.
References
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Financial accounting: Tools for business decision making (5th ed.). John Wiley & Sons.
Norton, C. L., Diamond, M. A., & Pagach, D. P. (2006). Cash and receivables. In Intermediate accounting: Financial reporting and analysis (p. 302). Houghton Mifflin Co.
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