Barrick gold project FINAL1.pdf

Barrick improved their percentage from 2016 to 2017

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Barrick improved their percentage from 2016 to 2017 as it means that they are moving into the right direction to achieve positive retained earnings in the future. Furthermore, the cost of goods sold only accounted for 47.17% of revenue in 2016 and 48.10% in 2017. These numbers contribute to a strong gross profit margin percentage for the corporation. However, it is a little worrying to see that this percentage got a little higher in 2017. Additionally, property, plant, and equipment make up over 50% of Barrick’s total assets in 2016 and 2017. This should be expect ed from a mining company because a large portion of its business relies on these assets. Finally, Barrick’s net income as a percentage of revenue increased from 7.71% to 17.27% from 2016 to 2017. This increase of almost 10% is very impressive and shows that the corporation is effectively cutting costs and in turn, increasing total profit. The increase in net income percentage is also likely a large contributor to the decrease in negative retained earnings percentage discussed above. If the corporation continues to improve its net income percentage over the years, it will become increasingly profitable and eventually attain a positive retained earnings percentage. Analysis of Profitability Gross Profit Margin Percentage 2016 2017 Barrick Gold Corp. = (Revenue COGS)/ Revenue = (11 254 7 633)/11 254 = 32.2% (10 812 7 497)/ 10 812 = 30.7% Newmont Mining Corp. = 44% = 45% From 2016-2017, Barrick Gold Corporation has seen a small decrease in their gross profit margin, which is the percent of revenue remaining after deducting the cost of goods sold. Dropping by 1.5%, from 32.2% to 30.7% is not a huge issue, because it is such a small amount. What is of some concern however, is their proximity to the industry. Barrick Gold Corporation is was 11.8% below their competitor in 2016 and 14.3% below their competitor in 2017. In addition, while their gross profit margin decreased by 0.5%, the competitors actually increased by 1%. This shows that Barrick Gold Corporation is lagging behind their competitors, which through thorough analysis of their financial statements is likely due to their significant income taxes, other general expenses, and high cost of goods sold, while not obtaining enough revenue to compete with other mining companies. This shows that in the future, Barrick Gold Corporation will need to find a way
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5 to either increase revenue or decrease their costs in order to effectively compete with their competitors. Operating Margin Percentage 2016 2017 Barrick Gold Corp. =(Revenue-COGS-operating expenses)/ Revenue =2 329/ 11 254 =20.7% 3 467/ 10 812 = 32.1% Newmont Mining Corp. = 0% = 17% Barrick Gold Corporation, along with the rest of the mining industry, experienced a significant increase in operating margins from 2016- 2017, which means that the percent of revenue after deducting costs of goods sold and operating expenses was greater in 2017. In 2017 Barrick Gold Corporation improved their margins by “divesting high cost, non - core operations”.
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  • Spring '14
  • ElizabethMulig
  • Balance Sheet, Generally Accepted Accounting Principles, Barrick gold corporation, Barrick-Gold

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