BUS 402

Operating Budget

The company that I have choose is ExxonMobil. ExxonMobil is the world’s largest oil and gas company. They have an industry-leading inventory of the global oil and gas resources. They are also the world’s largest refiner and marketer of the petroleum products, at which the chemical company ranks among the largest. ExxonMobil is a technology company that’s applies science and innovation in order to find better, cleaner and safer ways to deliver the energy to the world. At the beginning of 2018, Exxon Mobil employed an estimated 69,600 thousand employees

ExxonMobil was formed in 1999 through a merger of Exxon and Mobil. Both of these companies are the direct descendants of John D. Rockefeller’s Standard Oil Company. ExxonMobil has evolved their marketing in more than 200 countries and territories. They are a major company that manufactures the basic petrochemicals, such as aromatics, olefins, and polyethylene and the polypropylene plastics. They supply refined products to over 40,000 service stations and they also market products around the world under brand names like Exxon, Mobil, and Esso. They also own hundreds of the smaller subsidiaries such as the Sea River Maritime, and Imperial Limited in Canada. The global headquarters is located in Irving, Texas.

The Ratio’s that I have chosen is Profitability Ratio and the Liquidity Ratio

· Profitability Ratio is the key piece of information that should be analyzed when considering an investment in a company (Elmerraji, 2017). Looking at the profitability ratio, this will help show if the company will turn a profit and make enough for a return for the investors. In order to get the profitability ratio I took the company’s net income and divided it by the revenue. ExxonMobil profitability ratio for Prior Q is 5.41 and the Projected Q is 4.82. Which would be a 12% change in the ratio.

· Profit Margin = Net Income/Revenue

· Liquidity Ratio is a measure of how quickly a company’s assets can be converted to cash (Elmerragi, 2017). Looking at the liquidity ratio, this will help how much of the company’s assets can be converted into cash. In order to get the liquidity ratio I took the company’s Net credit sales and divided it by the average accounts receivable. ExxonMobil liquidity ratio for the Prior Q is 0.48 and the Projected Q is 0.5. Which would be a 4% change in the ratio.

· Accounts Receivable Turnover = Net Credit Sales/Average Accounts Receivable

References