Exxon versus Chevron

Accordin” rel=”nofollow”>ing to the textbook, the in” rel=”nofollow”>income statement measures the success of a company’s operations for a given period. The in” rel=”nofollow”>income statement is important to in” rel=”nofollow”>investors and creditors, because it determin” rel=”nofollow”>ines the profitability, in” rel=”nofollow”>investment value, and creditworthin” rel=”nofollow”>iness of a company. Specifically, the in” rel=”nofollow”>income statement helps in” rel=”nofollow”>investors and creditors predict the amounts, timin” rel=”nofollow”>ing, and uncertain” rel=”nofollow”>inty of future cash. Income statement preparers can make such in” rel=”nofollow”>informed predictions by analyzin” rel=”nofollow”>ing a company’s fin” rel=”nofollow”>inancial statements, calculatin” rel=”nofollow”>ing the price-earnin” rel=”nofollow”>ings ratio, and reviewin” rel=”nofollow”>ing notes to the fin” rel=”nofollow”>inancial statements on the in” rel=”nofollow”>income statement.
Research and review fin” rel=”nofollow”>inancial statements for Exxon and Chevron for the years 2012 and 2013.

Write a five to six (5-6) page paper in” rel=”nofollow”>in which you:
1. Compare and contrast the limitations and usefulness of the sin” rel=”nofollow”>ingle-step in” rel=”nofollow”>income statement and the multi-step in” rel=”nofollow”>income statement.
2. Analyze the gross profit, operatin” rel=”nofollow”>ing profits, and net in” rel=”nofollow”>income of both Exxon and Chevron for 2012 and 2013. Of the two (2) companies, speculate on the main” rel=”nofollow”>in reasons why one (1) company may have been more profitable than the other company.
3. Compute each company’s price-earnin” rel=”nofollow”>ings (P / E) ratio and price-to-sales ratio (PSR). Identify primary estimates or assumptions that could result in” rel=”nofollow”>in overstated earnin” rel=”nofollow”>ings, and use the ratio data to compare the quality of each company’s earnin” rel=”nofollow”>ings.
4. Review notes to both Exxon’s and Chevron’s fin” rel=”nofollow”>inancial statements. Next, identify at least two (2) notes pertain” rel=”nofollow”>inin” rel=”nofollow”>ing to the in” rel=”nofollow”>income statement, and explain” rel=”nofollow”>in the main” rel=”nofollow”>in way in” rel=”nofollow”>in which the notes in” rel=”nofollow”>in question could in” rel=”nofollow”>influence your decision to in” rel=”nofollow”>invest in” rel=”nofollow”>in each of the companies. Provide a rationale to justify your decision.

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