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Does ExxonMobil Have a Sound Debt Position?

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Mar. 11 2019, Published 12:38 p.m. ET

ExxonMobil’s debt

ExxonMobil’s (XOM) net debt-to-adjusted EBITDA ratio was 0.9x in the fourth quarter, which was below the industry average of 1.1x. The industry average considers 11 integrated energy companies globally.

In 2018, ExxonMobil’s total debt-to-capital ratio was 16%—below the peer average of 33%. The ratio shows a firm’s debt as a percentage of its total capital. The company’s ratio has fallen in the past three years. In 2016 and 2017, ExxonMobil’s total debt-to-capital ratio was 20% and 18%, respectively.

Chevron’s (CVX) total debt-to-capital ratio was 18% in 2018. However, Royal Dutch Shell (RDS.A) and BP’s (BP) ratios were higher at 28% and 39%, respectively, during the same period.

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Net debt-to-adjusted EBITDA ratio

ExxonMobil’s net debt-to-adjusted EBITDA ratio fell from 1.4x in the fourth quarter of 2017 to 0.9x in the fourth quarter. The ratio fell due to an 8% YoY decline in its net debt in the fourth quarter. ExxonMobil’s trailing 12-month adjusted EBITDA rose during the same period.

ExxonMobil’s debt analysis

ExxonMobil’s total debt fell by $4.5 billion in 2018, which is a good sign. The company’s management intends to keep the debt level under control. ExxonMobil’s debt ratios declined. Both of the ratios were below the industry average, which is a favorable scenario. ExxonMobil’s total debt-to-capital ratio was the lowest in the industry.

Overall, ExxonMobil’s debt position was stronger in 2018.

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