Free Cash Flow Analysis
According to my cash flow analysis, Chevron has a negative cash flow form operations of $64,145 millions. This can be perceived as badsituation to be at, but is mainly due to heavy investment. With an after tax cash flow from operations of $24,688 millions we can conclude that, the operations are generating profits, besides thatChevron received $6,323 Millions on non operating income plus $1,280 millions on special Items.
Regarding Change in Operating Working Capital, Chevron has a negative value of $369 millions. Analyzingcurrent assets and current liabilities we notice both in negative values, which indicate us that chevron is shrinking is assets and liabilities, in other words it’s working with a tighter capital. Thenegative change in current assets is due to mostly to the reduction of receivables ($6,590 millions), so the company preferred to collect more than it issued, probably due to global economic reason.Chevron has also reduced its liabilities; the company is paying its debt. The total value paid is ($2538 millions). The main payment was directed towards account payables ($5,176 millions). The netchange in Working capital is ($369 millions). We can see that chevron it’s maintaining an almost even change on the change of its assets and liabilities suggesting healthy operations
The biggest flowof capital was due to the change on fixed assets, with a net increase of $96,805 million dollars. The change in fixed assets was due almost entirely due to an increase in gross plant, property &equipment, in 2007 the value was $78,610 millions and in 2008 that figure jumped to $173,299 millions, this was huge investment. The main reason for this change in 2008 was the acquisition of more than 50percent ownership of Tengizchevroil (TCO), the objective is to develop the Tengiz and Korolev crude oil fields in Kazakhstan over a 40-year period. Besides thisthere is other change on investment on...