Onsolidated Financial Statement Analysis for Chevron US


1. Part 1. Understanding the consolidated group of companies
a?Are the accounting policies and accrual estimates in this company financial statements consistent with my understanding of this business and its recent performancea? a Palepu et al.

Identify the companyas mission
Provide a background summary of the companyas products and services
Identify key competitors
If your company operates multiple businesses discuss the corporate strategy (refer to Warren Buffett Way)
Identify the economic factors that drive the companyas financial performance together with any other political and social factors that could impact on the company performance. (Guidance: The task here is to use your knowledge from economics to identify the factors that drive the companyas sales and its cost of production and that ultimately impact on the companyas profitability to determine whether this company is worth consolidating (In other words you are preparing a risk analysis to determine what do you think as a team about Chevron US.)

Part2. Financial Statement Analysis
Conduct an analysis of the profitability, liquidity and capital structure of the company over the last five (5) years. Also you are required to provide complete details of the financial statement analysis (in Appendices that DO NOT form part of the official page count) that you have calculated. The critical question is a What do you think as a team about this group of companies?
Identify the limitations of your analysis
Identify any changes in the CEO during the past three (3) years. (refer to annual report)
Identify the auditor firm and the audit partner for each of the five years. If there have been changes in the audit firm and audit partner during this time comment on the financial reporting implications (refer to annual report)
Note any non a audit services and their relative value provided by the auditor and comment on the implications for auditor a independence (refer to annual report)
Comment on the auditoras report for the five year period and any significant financial reporting issues raised by the auditors (refer to annual report)

Part 3. Final Recommendation

You are also required to make a final recommendation, based on your analysis, as to whether your own company (that you are acting for as a consultant) should make an offer to take-over the group you have analysed.

2)Your analysis of the consolidated group

Your task is to act as a financial consultant whose responsibility is to report to the Senior Executive of the company you are working for: the job is to comprehensively assess the selected a?targeta group of companies for a possible aggressive business takeover offer to the shareholders of that a?targeta group.

Avoid concentrating your analysis only on the financial information and the ratio analyses of the group/company you have chosen.

Referencing Requirements:
1. Chevron worldwide annual report 2011
2. Warren Buffett Way
3. Palepu et al. Chapter 2 page 50-59
4. The companyaannual reports, the company investor information on the company website.

Murdoch Library databases:
- FinAnalysis
- DatAnalysis
Financial press a business pages in newspapers
Palepu. K et al. (2007, Business Analysis and valuation (IFRS edn). London: Thomson, chapter 1.
5. Company annual reports
Hoggett et al (2009) Financial Accounting (7th edition), Milton, Wiley