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How Strong is ExxonMobil’s Debt Position?

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Jun. 6 2019, Published 7:12 a.m. ET

ExxonMobil’s debt

ExxonMobil’s (XOM) net debt-to-adjusted EBITDA ratio was 1.0x in the first quarter—below the industry average of 1.2x. The industry average considers 11 integrated energy companies globally.

In the first quarter, ExxonMobil’s total debt-to-capital ratio was 17%—below the peer average of 34%. The ratio shows a snapshot of the company’s capital structure. Total’s (TOT) total debt-to-capital ratio was 33% in the first quarter. However, Royal Dutch Shell (RDS.A) and BP’s (BP) ratios were 32% and 43%, respectively, during the same period.

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ExxonMobil’s net debt-to-adjusted EBITDA ratio

ExxonMobil’s (XOM) net debt-to-adjusted EBITDA ratio fell from 1.1x in the first quarter of 2018 to 1.0x in the first quarter. The ratio fell due to the rise in the company’s trailing 12-month adjusted EBITDA. In the first quarter, ExxonMobil’s net debt was flat at $36.4 billion compared to the first quarter of 2018. The debt was flat due to an equivalent increase in the total debt and cash. The company’s debt and cash were $41.0 billion and $4.6 billion, respectively, in the first quarter.

What does ExxonMobil’s debt analysis imply?

ExxonMobil’s net debt-to-EBITDA ratio declined. Also, both of the company’s debt ratios were below the industry average—a favorable scenario. ExxonMobil had the best debt-to-capital ratio in the industry—a good sign pointing at management’s intentions to maintain its balance sheet strength and flexibility.

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