Chevron Company is an international energy corporation and the successor of standards oil located in San Ramon, California. The organization engages in every aspect of natural gas, geothermal energy, and oil industries, including hydrocarbon production and exploration (Arango & Katz, 2019). The company also makes refining, transport, marketing, chemical sales, manufacturing, and power generation. Chevron happens to be one of the largest companies in oil production. In 2019, the company was ranked 11th in Fortune 500 as one of the top corporations worldwide (Arango & Katz, 2019).
The organization was also ranked as one of the Seven Sister, which played a part in the domination of global petroleum industries between the years 1940 to 1970 (Arango & Katz, 2019). The company believes they are the business of progress, where their role pertains more to assisting people in accessing education, having better living standards, healthier and longer lives, and access economic and social opportunities (Arango & Katz, 2019). Their initial plan is to do business in a responsible and right way to provide reliable, ever-clean, and affordable energy essential to help people globally.
Financial Statement of Chevron Corporation
Chevron Corporation has a large-cap of about US $228b, which makes many investors seek for a reliable and robust stock investment platform (Simply Wall St, 2019). Most investors also prefer big stocks because of the high market and strong balance sheet. In other words, there is an abundance of inventory available in the public demand for trading purposes. Such companies are also resilient during the low liquidity because they are not impacted by the interest rates, especially if the company has debts.
The levels of debts in Chevron have fallen from the US $39b to 34b in the last year, which includes long-term debt. Since there is a debt payback, the current short-term and cash investment levels maintain at $9.4 billion (Simply Wall St, 2019). On top of this, Chevron has also managed to earn the US $9.4b in the last year as a result of cash operations. This shows that Chevron maintains to settle its debt through cash operation. The ratio also shows that there is efficiency in return on assets and that the company can make 0.89x cash from the debt capital (Simply Wall St, 2019).
The Liquid Assets for Chevron
Since Chevron has liabilities of about US$27b, it is also able to meet the commitments with the available assets of $34b to change the accounting ratio to 1.25 x (Simply Wall St, 2019). For gas and oil companies, for instance, the rate lies in a sensible range because of the cash buffer that does not produce a lot of capital during a low-return environment.
The Risk of Chevron Succumbing to the Debt-Load
The company's debt-to-equity ratio of 22% shows that the debt level is prudent (Simply Wall St, 2019). The reason why this level is considered safe is that the company is not concentrating on the debt obligation to avoid constraining the future growth of Chevron. The company is also able to meet the debt obligations when the net interest coverage ratio is analyzed. In other words, the earnings before tax and interest must cover the net benefit three times. In Chevron's case, the rate is 26.3 xs, and this means that the stakes are included (Simply Wall St, 2019). The figures show that Chevron is considered a reassuring and responsible practice that maintains high interest to make the company a health and safety organization.
Arango, I., & Katz, B. J. (2019). Understanding expulsion capacity and organic porosity in unconventional petroleum systems, 1(2), 161-198. Doi: 10.1130/abs/2019am-330948
Simply Wall St. (2019, February 28). Why Chevron Corporation (NYSE: CVX) Is A Financially Healthy Company. https://simplywall.st/stocks/us/energy/nyse-cvx/chevron/news/why-chevron-corporation-nysecvx-is-a-financially-healthy-company/
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Chevron: Int'l Energy Corp, Largest in Oil Production - Essay Sample. (2023, Jul 05). Retrieved from https://proessays.net/essays/chevron-intl-energy-corp-largest-in-oil-production-essay-sample
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