Exxon Mobil Corp. (XOM)

Inventory Accounting Policy

Crude oil, products and merchandise inventories are carried at the lower of current market value or cost (generally determined under the last-in, first-out method – LIFO). Inventory costs include expenditures and other charges (including depreciation) directly and indirectly incurred in bringing the inventory to its existing condition and location. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory cost. Inventories of materials and supplies are valued at cost or less.

Source: Exxon Mobil Corp., Annual Report

Inventory Disclosure

Exxon Mobil Corp., Statement of Financial Position, Inventory

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Crude oil, products and merchandise	10,836	11,665	9,852	8,718	9,331
Materials and supplies	3,706	3,359	3,124	2,835	2,315
Total inventories	14,542	15,024	12,976	11,553	11,646

Source: Based on data from Exxon Mobil Corp. Annual Reports

Item	Description	The company
Crude oil, products and merchandise	The aggregated amount of merchandise or goods held by the entity that are readily available for future sale and items held by the entity which are partially complete or in the process of being readied for future sale.	Exxon Mobil Corp.'s crude oil, products and merchandise increased from 2010 to 2011 but then slightly declined from 2011 to 2012.
Materials and supplies	Aggregated amount of unprocessed materials to be used in manufacturing or production process and supplies that will be consumed.	Exxon Mobil Corp.'s materials and supplies increased from 2010 to 2011 and from 2011 to 2012.
Total inventories	Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer).	Exxon Mobil Corp.'s total inventories increased from 2010 to 2011 but then slightly declined from 2011 to 2012.

Adjustment to Inventory: from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Adjustment to Total Inventories
Total inventories at LIFO (as reported)	14,542	15,024	12,976	11,553	11,646
Add: Inventory LIFO reserve	21,300	25,600	21,300	17,100	10,000
Total inventories at FIFO (adjusted)	35,842	40,624	34,276	28,653	21,646
Adjustment to Current Assets
Current assets (as reported)	64,460	72,963	58,984	55,235	72,266
Add: Inventory LIFO reserve	21,300	25,600	21,300	17,100	10,000
Current assets (adjusted)	85,760	98,563	80,284	72,335	82,266
Adjustment to Total Assets
Total assets (as reported)	333,795	331,052	302,510	233,323	228,052
Add: Inventory LIFO reserve	21,300	25,600	21,300	17,100	10,000
Total assets (adjusted)	355,095	356,652	323,810	250,423	238,052
Adjustment to Total ExxonMobil Share Of Equity
Total ExxonMobil share of equity (as reported)	165,863	154,396	146,839	110,569	112,965
Add: Inventory LIFO reserve	21,300	25,600	21,300	17,100	10,000
Total ExxonMobil share of equity (adjusted)	187,163	179,996	168,139	127,669	122,965
Adjustment to Net Income Attributable To ExxonMobil
Net income attributable to ExxonMobil (as reported)	44,880	41,060	30,460	19,280	45,220
Add: Increase (decrease) in inventory LIFO reserve	(4,300)	4,300	4,200	7,100	(15,400)
Net income attributable to ExxonMobil (adjusted)	40,580	45,360	34,660	26,380	29,820

Exxon Mobil Corp.'s inventory value on Dec 31, 2012 would be $35,842 (in millions) if the FIFO inventory method was used instead of LIFO. Exxon Mobil Corp.'s inventories, valued on a LIFO basis, on Dec 31, 2012 were $14,542 . Exxon Mobil Corp.'s inventories would have been $21,300 higher than reported on Dec 31, 2012 if the FIFO method had been used instead.

Adjusted Ratios: LIFO vs. FIFO (Summary)

Exxon Mobil Corp., adjusted ratios

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Current Ratio
Reported current ratio (LIFO)	1.01	0.94	0.94	1.06	1.47
Adjusted current ratio (FIFO)	1.34	1.27	1.28	1.39	1.68
Net Profit Margin
Reported net profit margin (LIFO)	9.90%	8.79%	8.23%	6.39%	9.84%
Adjusted net profit margin (FIFO)	8.96%	9.71%	9.36%	8.75%	6.49%
Total Asset Turnover
Reported total asset turnover (LIFO)	1.36	1.41	1.22	1.29	2.02
Adjusted total asset turnover (FIFO)	1.28	1.31	1.14	1.20	1.93
Financial Leverage
Reported financial leverage (LIFO)	2.01	2.14	2.06	2.11	2.02
Adjusted financial leverage (FIFO)	1.90	1.98	1.93	1.96	1.94
Return on Equity (ROE)
Reported ROE (LIFO)	27.06%	26.59%	20.74%	17.44%	40.03%
Adjusted ROE (FIFO)	21.68%	25.20%	20.61%	20.66%	24.25%
Return on Assets (ROA)
Reported ROA (LIFO)	13.45%	12.40%	10.07%	8.26%	19.83%
Adjusted ROA (FIFO)	11.43%	12.72%	10.70%	10.53%	12.53%

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Exxon Mobil Corp.'s adjusted current ratio deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Exxon Mobil Corp.'s adjusted net profit margin improved from 2010 to 2011 but then deteriorated significantly from 2011 to 2012.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Exxon Mobil Corp.'s adjusted total asset turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Exxon Mobil Corp.'s adjusted financial leverage increased from 2010 to 2011 but then declined significantly from 2011 to 2012.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	Exxon Mobil Corp.'s adjusted ROE improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Exxon Mobil Corp.'s adjusted ROA improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.

Adjusted Current Ratio

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Current assets (USD $ in millions)	64,460	72,963	58,984	55,235	72,266
Current liabilities (USD $ in millions)	64,139	77,505	62,633	52,061	49,100

Current ratio¹	1.01	0.94	0.94	1.06	1.47
Adjusted: from LIFO to FIFO
Adjusted current assets (USD $ in millions)	85,760	98,563	80,284	72,335	82,266
Current liabilities (USD $ in millions)	64,139	77,505	62,633	52,061	49,100

Adjusted current ratio²	1.34	1.27	1.28	1.39	1.68

2012 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 64,460 ÷ 64,139 = 1.01

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 85,760 ÷ 64,139 = 1.34

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	Exxon Mobil Corp.'s adjusted current ratio deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

Adjusted Net Profit Margin

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to ExxonMobil (USD $ in millions)	44,880	41,060	30,460	19,280	45,220
Sales and other operating revenue (USD $ in millions)	453,123	467,029	370,125	301,500	459,579

Net profit margin¹	9.90%	8.79%	8.23%	6.39%	9.84%
Adjusted: from LIFO to FIFO
Adjusted net income attributable to ExxonMobil (USD $ in millions)	40,580	45,360	34,660	26,380	29,820
Sales and other operating revenue (USD $ in millions)	453,123	467,029	370,125	301,500	459,579

Adjusted net profit margin²	8.96%	9.71%	9.36%	8.75%	6.49%

2012 Calculations

¹ Net profit margin = 100 × Net income attributable to ExxonMobil ÷ Sales and other operating revenue
= 100 × 44,880 ÷ 453,123 = 9.90%

² Adjusted net profit margin = 100 × Adjusted net income attributable to ExxonMobil ÷ Sales and other operating revenue
= 100 × 40,580 ÷ 453,123 = 8.96%

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Exxon Mobil Corp.'s adjusted net profit margin improved from 2010 to 2011 but then deteriorated significantly from 2011 to 2012.

Adjusted Total Asset Turnover

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Sales and other operating revenue (USD $ in millions)	453,123	467,029	370,125	301,500	459,579
Total assets (USD $ in millions)	333,795	331,052	302,510	233,323	228,052

Total asset turnover¹	1.36	1.41	1.22	1.29	2.02
Adjusted: from LIFO to FIFO
Sales and other operating revenue (USD $ in millions)	453,123	467,029	370,125	301,500	459,579
Adjusted total assets (USD $ in millions)	355,095	356,652	323,810	250,423	238,052

Adjusted total asset turnover²	1.28	1.31	1.14	1.20	1.93

2012 Calculations

¹ Total asset turnover = Sales and other operating revenue ÷ Total assets
= 453,123 ÷ 333,795 = 1.36

² Adjusted total asset turnover = Sales and other operating revenue ÷ Adjusted total assets
= 453,123 ÷ 355,095 = 1.28

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Exxon Mobil Corp.'s adjusted total asset turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012.

Adjusted Financial Leverage

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Total assets (USD $ in millions)	333,795	331,052	302,510	233,323	228,052
Total ExxonMobil share of equity (USD $ in millions)	165,863	154,396	146,839	110,569	112,965

Financial leverage¹	2.01	2.14	2.06	2.11	2.02
Adjusted: from LIFO to FIFO
Adjusted total assets (USD $ in millions)	355,095	356,652	323,810	250,423	238,052
Adjusted total ExxonMobil share of equity (USD $ in millions)	187,163	179,996	168,139	127,669	122,965

Adjusted financial leverage²	1.90	1.98	1.93	1.96	1.94

2012 Calculations

¹ Financial leverage = Total assets ÷ Total ExxonMobil share of equity
= 333,795 ÷ 165,863 = 2.01

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total ExxonMobil share of equity
= 355,095 ÷ 187,163 = 1.90

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Exxon Mobil Corp.'s adjusted financial leverage increased from 2010 to 2011 but then declined significantly from 2011 to 2012.

Adjusted Return On Equity (ROE)

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to ExxonMobil (USD $ in millions)	44,880	41,060	30,460	19,280	45,220
Total ExxonMobil share of equity (USD $ in millions)	165,863	154,396	146,839	110,569	112,965

ROE¹	27.06%	26.59%	20.74%	17.44%	40.03%
Adjusted: from LIFO to FIFO
Adjusted net income attributable to ExxonMobil (USD $ in millions)	40,580	45,360	34,660	26,380	29,820
Adjusted total ExxonMobil share of equity (USD $ in millions)	187,163	179,996	168,139	127,669	122,965

Adjusted ROE²	21.68%	25.20%	20.61%	20.66%	24.25%

2012 Calculations

¹ ROE = 100 × Net income attributable to ExxonMobil ÷ Total ExxonMobil share of equity
= 100 × 44,880 ÷ 165,863 = 27.06%

² Adjusted ROE = 100 × Adjusted net income attributable to ExxonMobil ÷ Adjusted total ExxonMobil share of equity
= 100 × 40,580 ÷ 187,163 = 21.68%

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity.	Exxon Mobil Corp.'s adjusted ROE improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.

Adjusted Return On Assets (ROA)

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to ExxonMobil (USD $ in millions)	44,880	41,060	30,460	19,280	45,220
Total assets (USD $ in millions)	333,795	331,052	302,510	233,323	228,052

ROA¹	13.45%	12.40%	10.07%	8.26%	19.83%
Adjusted: from LIFO to FIFO
Adjusted net income attributable to ExxonMobil (USD $ in millions)	40,580	45,360	34,660	26,380	29,820
Adjusted total assets (USD $ in millions)	355,095	356,652	323,810	250,423	238,052

Adjusted ROA²	11.43%	12.72%	10.70%	10.53%	12.53%

2012 Calculations

¹ ROA = 100 × Net income attributable to ExxonMobil ÷ Total assets
= 100 × 44,880 ÷ 333,795 = 13.45%

² Adjusted ROA = 100 × Adjusted net income attributable to ExxonMobil ÷ Adjusted total assets
= 100 × 40,580 ÷ 355,095 = 11.43%

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Exxon Mobil Corp.'s adjusted ROA improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.