Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented on the attached common-size balance sheet and income statements of this company.

2019 2018 2019 $ 2018 $ 4.1% 2.4% 6.4% 6.1% At December 31, 2019 Assets Current assets Cash Accounts receivable, less estimated doubtful accounts Inventories of crude oil and products Materials, supplies and prepaid expenses Total current assets Investments and long-term receivables Property, plant and equipment, less accumulated depreciation and depletion Goodwill Other assets, including intangibles, net Total assets 1,718 988 2,699 2,529 1,296 1,297 616 541 6,329 5,355 857 3.1% 3.1% 1.5% 1.3% 15.0% 12.9% 2.1% 2.1% 891 34,203 34.225 81.1% 82.6% 186 186 578 833 42,187 41.456 0.4% 0.4% 1.4% 2.0% 100.0% 100.0% $ $ Liabilities Current liabilities Notes and loans payable Accounts payable and accrued liabilities Income taxes payable Total current liabilities Long-term debt Other long-term obligations Deferred income tax liabilities Total liabilities 229 202 4,260 3.688 106 65 4,595 3,955 4,961 4,978 3,637 2.943 4,718 5.091 17,911 16.967 0.5% 0.5% 10.1% 8.9% 0.3% 0.2% 10.9% 9.5% 11.8% 12.0% 8.6% 7.1% 11.2% 12.3% 42.5% 40.9% Shareholders' equity Common shares at stated value Earnings reinvested Accumulated other comprehensive income (loss) Total shareholders' equity Total liabilities and shareholders' equity $ $ 1,375 1.446 24.812 24.560 -(1911) -(1517) 24,276 24.489 42,187 41.456 3.3% 3.5% 58.8% 59.2% (5%) -(4% 57.5% 59.1% 100.0% 100.0% 2019 2018 2017 2019 2018 For the years ended December 31, 2019 Revenues and other income Revenues 34,002 34,964 29,125 99.7% 99.6% Investment and other income 99 135 299 0.3% 0.4% 34,101 35,099 29,424 100.0% 100.0% 183 Total revenues and other income Expenses Exploration Purchases of crude oil and products Production and manufacturing Selling and general Federal excise tax and fuel charge Depreciation and depletion Non-service pension and postretirement benefit Financing Total expenses Income (loss) before income taxes Income taxes Net income (loss) 47 19 20,946 21.541 18.145 6,520 6.121 5.586 900 908 883 1,808 1,667 1,673 1,598 1.555 2.172 143 107 122 93 108 78 32,055 32.026 28.842 2,046 3.073 582 (154) 759 92 2,200 2.314 490 0.1% 0.19% 61.4% 61.4% 19.1% 17.4% 2.6% 2.6% 5.3% 4.7% 4.7% 4.4% 0.4% 0.3% 0.3% 0.3% 94.0% 91.29% 6.0% 8.8% (0.5%) 2.29% 6.596 6.6% (a) Amounts from related parties included in revenues, (note 17). 8,569 6.383 4.110 25.1% 18.2% (b) Amounts to related parties included in purchases of crude oil and products, (note 17). 3,305 4.092 2.687 9.79 11.79 C) Amounts to related parties included in production and manufacturing, and selling and general expenses, (note 17). 628 566 544 1.8% 1.6% (a) Amounts to related parties included in financing, (note 17). 98 89 60 0.3% 0.3%