Finance analysis Essay Example | Topics and Well Written Essays - 1500 words

Finance analysis - Essay Example As it is eminent through Figure 1, that return on assets as well as equity for ExxonMobil is much higher as compared to Shell’s, this is undoubtedly due to the fact that Shell’s profit margins are not even half of what Exxon earns. But the author also considers the fact that 11.80 % is not the half of 17.00 % which Exxon was able to attain. It is to be noted that the figures above only concern the year ending 2007, considering the fact that Exxon Mobil surpasses Shell in every manner here except for ‘Fixed Asset Turnover’, also considering that Exxon is a fundamentally stronger company than Shell the ‘fixed asset turnover’ wouldn’t be much of a hurdle. Although the author would like to place in some several very important facts here: The receivable days for Shell have decreased since the year 2005, when they were 79; but the receivable days for Exxon have increased from 27 to 33. Which is not a good sign for the company, but then again, there exist tremendous difference between the numbers 33 – 76. It seems Shell still has a long way to go. Similarly Shell has been able to decrease their credit period from 100 days in 2005 to just 93, as compared to Exxon’s which was 71 in 2005 and has increased to 83, so Shell is quite close on this one. It appears that Shell has conquered the liability / asset battle. Shell is officially ahead of Exxon on both the patterns of Liquidities, but not by far. Especially on the current ratio part which matters the most. Both the company’s are superbly maintaining their debt to equity ratios, as a matter of fact, if these figures go beyond this, the companies might set a new record and an example for other corporations; even attracting their jealousy. But considering their fundamentally sound position, this was eminent. Although, Exxon’s lead on Interest Coverage might prove to be a factor while considering dividends, as it processes out maximum dividends based on its Interest Coverage