For this week’s discussion assignment look at the financial statement of Exxon M

Question

For this week’s discussion assignment look at the financial statement of Exxon Mobil in the most recently released annual report. Does this company carry long-term debt on their balance sheet? What type of debt does the company carry? You will need to look in the notes to the financial statements to find information on the types of debt issued by the company. What is the company's debt-to-equity ratio, and debt ratio? Is a higher or lower ratio better? What do these ratios tell you about your company?

Explanation / Answer

Listed below are definitions of several of ExxonMobil’s key business and financial performance measures
and other terms. These definitions are provided to facilitate understanding of the terms and their calculation.
In the case of financial measures that we believe constitute “non-GAAP financial measures” under Securities
and Exchange Commission Regulation G, we provide a reconciliation to the most comparable Generally Accepted
Accounting Principles (GAAP) measure and other information required by that rule.
Total Shareholder Return • Measures the change in value of an investment in stock over a specified period of time, assuming
dividend reinvestment. We calculate shareholder return over a particular measurement period by: dividing (1) the sum
of (a) the cumulative value of dividends received during the measurement period, assuming reinvestment, plus (b) the
difference between the stock price at the end and at the beginning of the measurement period; by (2) the stock price at the
beginning of the measurement period. For this purpose, we assume dividends are reinvested in stock at market prices at
approximately the same time actual dividends are paid. Shareholder return is usually quoted on an annualized basis.
Capital and Exploration Expenditures (Capex) • Represents the combined total of additions at cost to property, plant and
equipment and exploration expenses on a before-tax basis from the Summary Statement of Income. ExxonMobil’s Capex
includes its share of similar costs for equity companies. Capex excludes assets acquired in nonmonetary exchanges
(effective 2013), the value of ExxonMobil shares used to acquire assets, and depreciation on the cost of exploration support
equipment and facilities recorded to property, plant and equipment when acquired. While ExxonMobil’s management is
responsible for all investments and elements of net income, particular focus is placed on managing the controllable aspects
of this group of expenditures.
Heavy Oil and Oil Sands • “Heavy oil” includes heavy oil, extra heavy oil, and bitumen, as defined by the World Petroleum
Congress in 1987 based on American Petroleum Institute (API) gravity and viscosity at reservoir conditions. Heavy oil has
an API gravity between 10 and 22.3 degrees. The API gravity of extra heavy oil and bitumen is less than 10 degrees. Extra
heavy oil has a viscosity less than 10 thousand centipoise, whereas the viscosity of bitumen is greater than 10 thousand
centipoise. The term “oil sands” is used to indicate heavy oil (generally bitumen) that is recovered in a mining operation.
Proved Reserves • Proved reserve figures are determined in accordance with SEC definitions in effect at the end of each
applicable year, except that in statements covering reserve replacement for years prior to 2009, reserves include oil sands
and equity company reserves which at the time were excluded from SEC reserves.
Proved Reserves Replacement Ratio • The reserves replacement ratio is calculated for a specified period utilizing the
applicable proved oil-equivalent reserves additions divided by oil-equivalent production. See “Proved Reserves” above.
Resources, Resource Base, and Recoverable Resources • Along with similar terms used, these refer to the total remaining
estimated quantities of oil and gas that are expected to be ultimately recoverable. ExxonMobil refers to new discoveries and
acquisitions of discovered resources as resource additions. The resource base includes quantities of oil and gas that are not
yet classified as proved reserves, but which ExxonMobil believes will likely be moved into the proved reserves category and
produced in the future. The term “resource base” is not intended to correspond to SEC definitions such as “probable” or
“possible” reserves.
Prime Product Sales • Prime product sales are total product sales excluding carbon black oil and sulfur. Prime product sales
include ExxonMobil’s share of equity company volumes and finished product transfers to the Downstream.
Volume Effects • Entitlements – Net Interest are changes to ExxonMobil’s share of production volumes caused by
non-operational changes to volume-determining factors. These factors consist of net interest changes specified in
Production Sharing Contracts (PSCs) which typically occur when cumulative investment returns or production volumes
achieve defined thresholds, changes in equity upon achieving pay-out in partner investment carry situations, equity
redeterminations as specified in venture agreements, or as a result of the termination or expiry of a concession. Once a net
interest change has occurred, it typically will not be reversed by subsequent events, such as lower crude oil prices.

the largest annual and quarterly earnings and losses in corporate history. In general terms the oil and gas industry is the one generating both largest annual and quarterly earnings. In contrast, both the annual and quarterly losses are more distributed across industries. Telecommunications and financial services, however, are represented quite often on the lists of largest losses.

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