V. Conclusions and Recommendations: Using your evaluation, determine which firm is better performing in terms of short-term financial management. For the firm that is not performing well, make the following recommendations for performance enhancement, supporting each with evidence:

A. Indicate which forecasting tools should be used, and defend your claims using specific evidence.

B. Propose specific working capital and borrowing options that align to the firm's strategic objectives.

C. Propose specific financial products that align to the firm's strategic objectives.

D. Explain how your recommendations appropriately address each of your identified risks

Liquidity Ratios

Liquidity ratios are significant to the financial metrics used to decide a borrower's ability to repay current debt obligations without the capital raising. The calculations that measures the Liquidity ratios are the current ratio, quick ratio, and cash ratio. Exxon's current ratio, quick ratio, and cash ratio in 2018 was .84, .51, and .05. Chevron liquidity ratios in 2018 were 1.25, 1.04, and .35. The industry average in 2018 was 1.08, .74, and .25. Chevron is superior than Exxon in every category. Also, Chevron was better than the industry average. Exxon did not do too well compared to the industry average in 2018. The industry average had a better current ratio, quick ratio, and cash ratio.

Financial Ratios

Activity ratio indicates how efficiently a company is leveraging assets on the balance sheet. Activity ratios also help forecasters measure how the firm controls inventory management. This is an important key to operational variability and general economic health. Exxon Inventory turnover ratio is 10.71. As for Chevron, the inventory ratio is 20.18. The industry average for the inventory turnover ratio is 9.4. Once again Chevron is superior when it came to the inventory turnover ratio. Although Exxon inventory ratio was not better than Chevron, Exxon exceeded the industry average which is good. Since Chevron has the highest inventory turnover ratio this means that Chevron has the better inventory control. Exxon debt to equity ratio is .81 and Chevron debt to equity ration is .64. When it comes to the debt to equity ratio Exxon does have more compared to Chevron but in this case that is not good. A higher debt to equity ratio means that Exxon has a heavier debt load. As for the debt ratio, Exxon has .43 and Chevron has .39. This is good for both companies. If the debt ratio was above 50% it would be trouble. Usually when a company has a debt ratio over 50%, the company could be in trouble with the creditors if they would abruptly ask for compensations. Profitability ratios are very important to the company. They give you an understanding to the business and help analyst get a sign of the right amount of the profits. Some profitability ratios are the gross margin, operating profit margin, Net profit margin, Return on Assets and Return on Equity. Exxon gross margin was .31 and Chevron was .28. The higher your gross margin, the more effective the company is at producing goods and services. As you can see, Exxon had the better gross margin. Exxon operating profit margin is 7.92, Chevron is 9.09 and the industry average is 9.47. Chevron had the better operating profit margin but both companies fall short to the industry average. Exxon's Net profit, Return on Equity, and Return on Asset was 7.46, 10.87, 6.02. Chevron's Net profit, Return on Equity, and the Return on Assets was 9.33, 9.59, and 5.84. The industry average was 8.41, 11.11, and 6.02. Exxon has the better Return on Equity and Return on Asset, but Exxon still is not better than the industry average. As for Chevron, the Net profit was superior than Exxon and the industry average. Market value ratios are very important to a business. market ratios help the investor and owner of business determine the health of company by matching metrics. Some Market ratios are the Price to earnings, Price to book value, and Price to sales. Exxon's price to earnings, price to book value, and price to sales was 16.15, 1.75, and 1.20. Chevron's price to earnings, price to book value, and price to sales was 15.30, 1.47, and 1.43. The industry average for the market ratios are 15.43, 1.71, and 1.29. Exxon exceeded every category but the price to sale. The price to earnings is very important because it gives forecasters a good important sign of what inventors are paying for the stock in relative to the business earnings. Both Exxon and Chevron are over the industry average for the price to book value. Usually values under 1 is considered a good Price to book value. Though, some value investors consider stocks under 3.0 good price to book value too. Lastly, Exxon price to sales was under the industry value and Chevron was over. A high price to sales ratio means that the market is eager to pay for each dollar of yearly sales. If the ratios are between one and two the business is considered good so, Exxon and Chevron are both in great shape when it comes to the price to sale.