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Analyzing ExxonMobil’s Liquidity in 2018

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ExxonMobil’s cash flows

In 2018, ExxonMobil (XOM) generated ~$36.0 billion in cash from operations—a 20% rise compared to 2017. The company’s cash outflows from investing were $16.5 billion, while the cash outflows from financing were $19.7 billion in 2018.

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Cash flow surplus in 2018

In 2018, ExxonMobil spent $19.6 billion on plant, property, and equipment additions. The dividend payments were $13.8 billion during the same period. These vital outflows were $33.4 billion in 2018. After spending on these critical outflows, ExxonMobil was left with a surplus of $2.6 billion—the difference between cash flow from operations of $36.0 billion and vital cash outflows of $33.4 billion.

Chevron (CVX) also had a cash flow surplus in 2018. Royal Dutch Shell’s (RDS.A) cash inflows from operations were higher than the combined capex and dividend outflows. BP (BP) had a cash flow shortfall in 2018.

ExxonMobil’s divestment proceeds were $4.1 billion. The cash flow surplus and divestment proceeds were used to repay some of the debt. The company also made additional investments and advances. ExxonMobil’s cash balance fell marginally from $3.2 billion at the beginning of the year to $3.0 billion at the end of the year.

What does the cash flow analysis reveal?

ExxonMobil had a cash flow surplus in 2018, which is a favorable scenario. The surplus rose from 6% (as a percentage of cash flow from operations) in 2017 to 7% in 2018. The company used the surplus cash to repay some of the debt and strengthen its financials.

In 2018, ExxonMobil’s financial strength increased due to its lower debt and improved liquidity position.

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