A company’s debt, liabilities and risk are very important factors in understanding the company. Having an understanding of a company’s debt and liabilities is a key component in understanding the risk of a company, thus aiding in the decision to invest, not to invest, or to stay invested in a company. There are many metrics involved in understanding the debt of a company, but for this article, I will look at Exxon Mobil Corporation‘s (XOM) total debt, total liabilities, debt ratios and WACC.
Through the above-mentioned four main metrics, we will understand more about the company’s debt, liabilities and risk. If this summary is compared with other companies in the same sector, you will be able see which has the most debt and the most risk.
1. Total Debt = Long-Term Debt + Short-Term Debt
Debt is an amount of money borrowed by one party from another, and must be paid back. Total debt is the sum of long-term debt, which is debt that is due in one year or more, and short-term debt, which is any debt that is due within one year.
- 2007 – $7.183 billion + $2.383 billion = $9.566 billion
- 2008 – $7.025 billion + $2.400 billion = $9.425 billion
- 2009 – $7.129 billion + $2.476 billion = $9.605 billion
- 2010 – $12.227 billion + $2.787 billion = $15.014 billion
- 2011 – $9.322 billion + $6.949 billion = $17.033 billion
Exxon Mobil’s total debt has increased over the past five years.