Question

	2017	2016	2015
Net income (loss) attributable to Chevron Corporation	$ 9,195	$ 497)	$ 4,587
Sales and other operating revenues	134,674	110,215	129,925
Cash provided by operating activities	20,515	12,846	19,456
Capital and exploratory expenditures2	18,821	22,428	33,979
Total assets at year-end	253,806	260,078	264,540 *
Total debt and capital lease obligations at year-end	38,763	46,126	$ 38,549 *
Chevron Corporation stockholders’ equity at year-end	148,4	145,556	152,716
Common shares outstanding at year-end (Thousands Per-share data	1,890,534	1,877,338	1,868,646
Net income (loss) attributable to Chevron Corporation – dilute	4.85	(0.27)	2.45
Cash dividends	4.32	4.29	4.28
Chevron Corporation stockholders’ equity	78.35	77.53	81.73
Common stock price at year-end	125.19	117.70	89.96
Debt ratio	20.7%	24.1%	20.2%
Return on stockholders’ equity	6.3%	(0.3)%	3.0%
Return on capital employed	5.0%	(0.1)%	2.5%

Please use the above financial statements to answer the following.

a) Analyze the current financial position of this company in terms of total debt and equity.

b) Skim through the firm's financial statements and comment on the trends of this statements.

c) List some interesting financial facts about this company and compare what you now know to what you knew about this company.

Answer 1

a). Note that equity = total assets - total debt.

Thus, we have total equity of the company to be 253806-38763 = $215043 in the year 2017 whereas total debt of the company in the year 2017 is around $38763 which goes to show that equity component of the company is quite as compared to debt component which provides sufficient enough support or we can say sufficient security to debt holders. Thus financial position of the company considering total debt and total equity is very strong.

b) . If we go through the trends in financial statements key ratio we can find out following :-

Debt ratio of the company has remained range bound. It though increased in 2016 to 24.1%

as compared to what it has been in 2015 which was around 20.2% but it again came down to 20.7% in 2017 which goes to show that debt of the company in relative terms continued to remain almost same.

Return on stockholder equity = return on stockholder equity decreased in 2016 to -0.3% from what it has been in 2015 I e. 3% . However, again there was a sharp upturn to the return in 2017 and it again came to positive path i.e. 6.3%.

Return on capital employed = return on capital employed which shows overall return provided by the company to it's stockholders in large . It shows a similar trend to return on stockholder equity as it also fall down to -0.1% in 2016 compared to 2.5% in 2015 but again came to positive trajectory in 2017 at 5%.

C) . Some interesting financial facts about the company are :-

1. Tremendous Growth in net income despite slow growth in sales = Growth in sales was around 4% from 2015 to 2017 , however profit from 2015 to 2017 just doubled and shown a great growth.

2. Constant dividend policy = company has almost followed a constant dividend distribution policy despite ups and downs in sales. Dividend in 2015 was 4.28 then in 2016 it was around 4.29 then in 2017 then it was 4.32, this, almost same dividend despite so much fluctuation in profit of the company.

3. Return on stockholder equity = return on stockholder equity has been quite fluctuating fir the company . It has even plunged to negative in 2016 but at least it was more than double in 2017 at 6.3% compared to what it was in 2015 at 3%.