Financial Analysis of Energy Firms

The case focuses on analyzing financial statement data for four companies (Amerada Hess, Mobil, Pennzoil, Unocal) in the oil and gas industry. The data was obtained from Compustat PC Plus. The case provides balance sheets, income statements, common size balance sheets, common size income statements and a statement of cash flows for the 1994-1996 periods. Students are asked to (1) evaluate information provided in the balance sheet, income statement, the common size data, and the statement of cash flows, (2) compute financial ratios for two of the four companies for 1997, and to (3) use the computations to evaluate the relative financial performance of the four companies. A firm valuation perspective is a useful theme for organizing the evaluation of the financial statement data.