Financial Characteristics and Risk Strategy Analysis of Oil Giant Companies under The Background of Global Economic Recession

DOI

10.2991/978-94-6463-408-2_50How to use a DOI?

Keywords

Financial Health; ExxonMobil; Third Keyword

Abstract

In the context of the evolving energy industry, this study provides a comparative analysis of two industry giants, ExxonMobil and Royal Dutch Shell. The study aims to examine their financial health, with a particular focus on three key metrics: leverage, weighted average cost of capital (WACC), and asset Beta (βa). The study adopted quantitative research methods to carefully collect and analyze the financial data of the two companies. The results revealed striking differences in their financial characteristics. ExxonMobil is more leveraged, with a WACC about 4 percent higher than Royal Dutch Shell and an asset beta of 1.01, indicating greater sensitivity to market volatility. In contrast, Shell has lower leverage, a low WACC and an asset beta of 0.49, reflecting a more stable market reaction. These results underscore the critical importance of aligning financial structures with strategic objectives. ExxonMobil’s conservative financial strategy may help reduce risk, while Shell’s lower cost of capital may provide a competitive advantage in seeking investments. In conclusion, this study reveals the critical role of financial dynamics in the energy sector, providing valuable insights for investors and industry stakeholders. Future research may explore additional financial metrics and industry-specific factors to further enrich our understanding of these companies’ financial strategies.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Qingrui Luo
PY  - 2024
DA  - 2024/05/07
TI  - Financial Characteristics and Risk Strategy Analysis of Oil Giant Companies under The Background of Global Economic Recession
BT  - Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024)
PB  - Atlantis Press
SP  - 442
EP  - 449
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-408-2_50
DO  - 10.2991/978-94-6463-408-2_50
ID  - Luo2024
ER  -