Home
My Life
Resume
Transcript
Documents
Galleries
Code
E-Books
Resources
Greeting Cards
My University
IEEE
Pakistan Pics

Industry:     Mining

Company:             Azco Mining Inc.    Far West Mining Limited     Kenrich Mining Co.

Fiscal year End:  June 30                   Dec. 31                                 Feb. 28

Auditors:               PCW                       Ellis Foster                           Amisano Hanson

Years Covered:   1999, 2000 and 2001
 

Far West Mining Limited

Far West Mining Limited is an international mineral exploration company publicly listed for trading on the TSX Venture Exchange (FWM). The company's objective is to achieve significant capital appreciation for its shareholders by becoming involved in drill ready exploration and development projects of major economic importance through the usage of leading edge technology. It is management’s belief that this goal can best be achieved by collaborating with Major mining companies through the formation of Strategic Alliances, utilizing their technical and financial ability to identify high priority drill-ready exploration regions around the world.

This approach enables Far West to work in environments, which have a high discovery rate or which are relatively unexplored and which have favourable geologic, economic and political attributes. It also allows Far West to reduce the exploration risk significantly, by-passes the cost and time involved in generative exploration, and exposes FWM to "world class" targets. The company has interests in extensive land holdings in North and South America

Kenrich-Eskay Mining Corporation

Kenrich-Eskay Mining Corporation (KENRICH-ESKAY) Formerly known as Kenrich Mining Corporation. The Company's principal activity is to explore and develop gold-bearing properties in British Columbia, Canada. At present the Company is at the exploration stage of operations. The Company is currently involved in the Corey Property located in northwestern British Columbia. During 1999, 2000 and 2001 the Company did not conduct any exploration activities on the Corey Property and therefore did not generate any revenues.

Azco Mining Incorporated

AZCO is one of the leading Mining companies. AZCO is in possession of the Sanchez copper project in Safford, Arizona and later two copper projects in Sonora, Mexico. With 1998’s resource increase at Piedras Verdes, AZCO has been directly involved in projects with total resources approaching the four billion pounds of copper. Last years work alone increased the resource at Piedras Verdes by over one billion pounds. This at a time that, despite low copper prices, a greater emphasis is being placed on leachable copper projects. AZCO is extremely confident that as copper prices recover over time the Piedras Verdes project will be developed as one of the lowest cost copper operations in the world.

AZCO has adapted its business strategy to take advantage of the turmoil in the natural resources sector. The company is extremely excited about the developments at its Black Canyon Mica Project near Phoenix, Arizona. The objective of the strategy is to acquire projects with low entry and production costs generating strong positive cash flow to the bottom line. Management is focused on the acquisition of cash flow driven assets with a revenue objective of US$20 million annually within the next two years

Historical Financial Information for Far West Mining Limited

Ratios*:                      2001              2000                 1999

Current ratio               22.82             55.1                    5.86                                                   

Quick ratio                 22.82              55.1                    5.86

Debt/equity ratio        0.000669       0.00468             0.08                           

Invested-capital         N/A                  N/A                     N/A

EPS                            ($0.0371)       ($0.16)               $0.02

ROE                            (1.795%)        0.75%                0.03%

Gross profit                N/A                  N/A                     N/A

Receivable T.O.        0.269              4.92                    0.57   

Inventory T.O.             N/A                  N/A                    N/A

Asset T.O.                  0.0104            0.021                 0.0048           

Net income                ($89,304)        $3,336,746      $266,990                     

Cash                           ($292,216)       ($60,876)       ($251,412)

from operations                                            

Total assets               $4,816,725      $4,475,678      $8,346,489     

Ratio Calculations For Far West Mining Limited

Financial Analysis for Far West Mining Limited

Liquidity: Far West Mining Corp. experienced a very strong current and quick ratios growth from 1999 to 2000, dropping to a modest average in 2001. This was mainly because of FWM Limited’ unusually large proportion of credit accounts. Good liquidity showing from 1999 to 2000 qualified FWMC to more than adequately meet its current maturing obligations. Though company’s short term standing in 2001 shows a decline in both rations from the unusually high ratios of 2000 but it is still higher than the ratios of 1999.

Solvency: FWM Limited had a decrease in total-debt-to-equity ration from 1998 to 2001. The decrease in ratios was quite large each year. Decrease in debt-equity-ratio is generally preferable for creditor because they have a prior claim on companies’ assets and prefer to have a larger equity beneath them. FWM Limited had no long-term debts, so the long-term debts to invested-capital ratio, which indicates that the long-term capital structure of FWM could not be calculated.

Profitability: Earnings-per-share represent the portion of income for a period attributable to a share of issued capital of an enterprise. It assists shareholders in evaluating past operating performance of the business. The higher the ratio the better. FWM Limited recorded a loss per share in 2000 and a gain in 2001. Even though they were at a loss in 2001 in comparison to 2000, but it was still a gain of $0.12 from 1999 share values. Return-on-equity also measures a company’s profitability relative to the resources provided by its owners, it measures an adequacy of return-on-capital-invested by the owner. Even though FWM Limited had a gain in 2000, however, it worsened in 2001. The cost of goods is not available; therefore the gross-profit-margin ration cannot be calculated. In general, from 1999 to 2001 the company had very poor profitability ratios.

Asset Management: Inventory-turnover-ratios couldn’t be calculated because the cost-of-good was not provided. Total-asset-turnover-ratio examines company’s utilization of its revenue - producing assets. FWM Limited recorded a good improvement from 1999 to 2001. The higher the total asset turnover ratio, the better it is for the company. The accounts-receivable-turnover ratio measures the rate at which companies accounts-receivable and notes-receivables are converted to cash. FWM Limited had an improvement from 1999 to 2000; it showed an even greater improvement from 2000 to 2001. In general, FWM Limited had great asset management.

Historical Financial Information for Kenrich Mining Corp.

Ratios*:                      2001                           2000                           1999

Current ratio               0.184                          0.217                          0.885                         

Quick ratio                 0.184                          0.216                          0.865 

Debt/equity ratio        0.037                          0.034                          0.021             

Invested-capital         N/A                              N/A                              N/A

EPS                            ($0.0429)                   ($0.002)                     ($0.03)

ROE                            (0.143%)                    (0.002%)                    (0.07%)

Gross profit                N/A                              N/A                              N/A

Receivable T.O.        0                                  0.046                          0.149

Inventory T.O.             N/A                              N/A                              N/A                 

Asset T.O.                  0.0001                        0.000082                   0.00145

Net income                ($1,220,460)              ($225,801)                ($672,402)      

Cash                           ($147,577)                ($233,240)                 ($657,841)

from operations                                            

Total assets              $8,537,439                 $9,591,755                $9,719,050

Ratio Calculations for Kenrich Mining Corp.

Financial Analysis for Kenrich Mining Corporation

Liquidity: In terms of liquidity, Kenrich Mining Corporation had a relatively good year in 1999. Their current and quick ratios were both high. However, both ratios dropped rapidly in 2000. This was because their current assets dropped at a significantly larger rate than their current liabilities. Both ratios also decreased in 2001 giving them a relatively bad year.

Solvency: Kenrich Mining Corporation’s total-debt-equity ratio shows a gradual increase from 1999 to 2001 indicating poor long-term financial standing from year to year. Kenrich Mining Corporation’s ability to pay long-term debt has suffered over the past three years form 1999 to 2001. Kenrich Mining Corporation did not have long-term debts so the long-term debt-to-invested-capital ratio, which indicates the long-term capital structure of the company could not be calculated.

Profitability: Profitability refers to the success of a company’s operations. It is the measure of the extent to which accomplishments exceed effort. Kenrich Mining Corporation had a relatively bad year in 1999, which worsened in 2000 but improved in 2001. A similar pattern was reflected on return-on-equity ratio. This swing pattern of Kenrich Mining Corporation’s profitability may leave a negative image on shareholders who prefer to see resilient profitability ratios.

Asset Management: Asset management is a measure of managements’ ability to effectively utilize a company’s assets to produce income. The ratios used to measure this are total-asset-turn-over ratio, accounts-receivables ratio and inventory-turnover ratio. Kenrich Mining Corporation had a relatively good year in 1999 in terms of asset-turnover management; it however deteriorated in 2000 and improved in 2001. Better asset-management reduces potential for product obsolescence and deterioration. Kenrich Mining Corporation had a poor accounts receivable management, which got only worst from 1999 to 2001. We have no explanation for the low accounts-receivable ratio in 2000. But for 2001 we have some clues. Zero collection was made on accounts-receivables in 2001 because (as explained in note 6) Kenrich Mining Corporation’s directors owed it $120,000 in unpaid expenses. We were unable to calculate inventory-turnover-ratios because the cost-of-good was not provided.

Historical Financial Information for Azco Mining Inc.

Ratios                               2001                           2000                            1999

Current Ratio                  1.38:1                         1.70:1                           9.63:1

Quick Ratio                     0.56:1                         0.06:1                          7.64:1

Debt/Equity                     0.33:1                         0.08:1                          0.04:1

Debt/Invested-capital      0.29:1                         0.09:1                          0.04:1

EPS                                $(.14)                         $(0.11)                         $(0.13)

ROE                               (0.52)%                     (0.33)%                        (0.29)%

Gross Profit           *Cannot be calculated on the basis of the data given*

Receivable T.O.    *Cannot be calculated on the basis of the data given* 

Asset T.O.                       0.004:1                        0.001:1                       0.04:1

Inventory T.O.                 4.14:1                          2.94:1                         4.49:1

Net Income                    (4,247,586)              (3,365,376)                  (3,899,486)

Cash from                     (2,626,839)               (2,662,273)                  (4,157,875)

Operations

Total Assets                 12,991,072                11,904,545                   13,872,311

Ratio Calculations for Azco Mining Inc.

Ratios                                 2001                          2000                        1999

Current ratio                      1.38:1                       1.70 :1                      9.63 :1

(current assets/                2159652                    1176056                   5449741

current liabilities)              1570440                    690719                  566028

Quick ratio                         0.56:1                         0.06:1                   7.64:1

(quick assets/current        884647                       39920                    4324886

liabilities)                         1570440                      690719                   566028

Debt/equity ratio                 0.33:1                       0.08:1                    0.04:1

(total debt/equity)             2659523                     866023                     566028

                                         8109887                   10157403                13306283  

LTD/Invested                      0.29:1                       0.09:1                    0.04:1

capital ratio                       3310745                   1056423                 566028    

                                         11420632                 11213826               13872311

Earnings per share           $(0.14)                       $(0.11)                    $(0.13)

(Net income/ no. of          (4247586)                  (3365376)               (3899486)

common shares               30295261                  29964636               29846839

outstanding)

Return on Equity               (0.52)%                      (0.33)%                    (0.29)%

(Net income/ Equity)        (4247586)                  (3365376)               (3899486)

                                            8109887                   10157403               13306283        

Gross profit              Cannot be calculated on the basis of the information given

(Gross Profit/Sales)

Receivable Turnover   Cannot be calculated on the basis of the information given

(Sales(revenues)/

Accounts receivables)

Inventory Turnover            4.14:1                           2.94:1                        4.49:1

Cost of sales/                   4541741                      3453802                     4491676

Inventory)                        1095780                       1176056                     1000778

Total Asset                        0.004:1                          0.001:1                       0.04:1

Turnover                           64880                             17600                        592190

Sales/Total assets        12991072                        11904545                   13872311

Financial Analysis for Azco Mining Inc.

Liquidity

Azco Mining Inc realized a weak liquidity position in the last three years (1999-2001). The current ratio was quite high in 1999, which showed company’s good liquidity. The current ratio dropped significantly from 9.63:1 in 1999 to 1.70:1 in 2000 meaning that the company’s liquidity position weakened in 2000. In 1999 the current ratio was quite high which also meant good liquidity, suggesting that the company’s currently maturing obligations were likely to be paid on time. The same pattern was invariably visible in quick ratios for the three years. The quick ratio for 1999 was quite high falling to 0.06:1 in 2000 and to 0.56:1 in 1999.

Solvency

The company realized its lowest debt-to-equity ratio in the year 1999, which is a positive sign for the company because the creditors usually like to see a lower debt-to-equity ratio. The reason for this is that they have a prior claim on a company’s assets and prefer to have a larger equity cushion beneath them. Debt-to-equity ratios for the year 2000 and 1999 are almost the same and the difference is small. Long-term debt-to-equity ratios are very low as well meaning that the company is in a position to meet its interest payments during periods of low earnings.

Profitability

The company realized a weak Profitability position over the last three years. Return on equity for the three years are very low which is not good news for the investors because higher the ROE the more profitable a company is thought to be. Earning per share is also going down meaning it is realizing a weak profitability position. Gross profit margin ratio couldn’t be calculated due to the unavailability of relevant data.

Asset Management

The company’s inventory to turnover ratio decreased from 4.49:1 in year 1999 to 2.94:1 in the year 2000 but it takes a climb again in 2001. Inventory-turnover ratios have been high over the past three years, which shows that the company is profitable and the inventory management is effective. There is a slight decrease in the asset-turnover ratio since 1999. In general the higher this ratio the better it is for the company. Decreasing ratio doesn’t necessarily indicate poor asset utilization.

Our analysis compared the financial positions of Azco Mining Inc, Far West Mining Ltd and Kenrich Mining Co. It is important to note that the fiscal year end for Azco Mining Inc. is June 30th, June 31st for Far West Mining Ltd and February 28th for Kenrich Mining Corp. Since we did not have ratio averages for the mining industry we were unable to provide an industry comparison. As such this financial analysis compared the three companies only.

Liquidity:

Liquidity wise Far West Mining Limited realized a better position in comparison to Azco Mining Inc. and Kenrich Mining Co. Far West Mining Limited experienced its highest current ratio in 2000 because the current assets for the company were higher than the current liabilities. In 1999 Azco Mining Inc. had a higher liquidity as compared to far West and Azco. In 2001 Far west still had the highest liquidity after taking a dip from 2000. Unlike Far West, Azco and Kenrich had experienced a continuous decrease in their liquidity ratios. As such Far West was most likely to meet its current maturity obligations as compared to Kenrich and Azco.

Solvency: 

In terms of Solvency Far West was in a better position as compared to Azco and Kenrich. In 2001 the solvency ratio for Far West was the lower of the other two companies, which means that Far West had a better year in 2001 in terms of solvency. However, the same ratio increased continuously for Azco and Kenrich from 1999 to 2001, which means that they were lesser solvent as compared to Far West. In other words Far West was more solvent of the three companies and as such it was more likely to meet its long-term obligations.

Profitability:

In terms of profitability Far West was the most profitable of the three companies. Azco Mining Incorporation’s profitability from 1999 to 2001 was least volatile losing between ($0.11) – ($0.14) per share from 1999 to 2001. Far West Mining delivered the best earning-per-share of $0.02 per share in 1999, while Azco Mining and Kenrich Mining both suffered a loss that year. However, an equal amount of money invested in the three companies in 1999 would have suffered the least amount of loss with Kenrich Mining of ($0.08) per share, as compared to ($0.17) with Far West and ($0.38) with Azco.

Far West Mining was the only company showing a profitable return-on-equity ratio in 1999 and 2000. In contrast, consistent increasing losses of (0.07%) were seen for Kenrich and (0.29%) for Azco Mining in 1999. A comparison of gross-profit-margin ratio was not possible because we were not provided with the required information.

Asset Management:

Overall Far West Mining had the best asset management of the three companies. It had the highest receivable-turnover-ratio each year, followed by Kenrich Mining (we are not provided with Azco Mining’s receivable-turn-over ration data). Far West also had a very high turn-over-ratio of 4.92 in 2000. Far West’s better accounts-receivable management positioned it to convert its accounts and notes receivable into cash at a higher rate than Kenrich.

Far West Mining also had the best asset-turnover ratio trend for the three years. Like accounts-receivable ratio, the higher the asset-turnover ratio the better. Far West’s asset-turnover ratio increased from 0.0048 in 1999 to 0.014 in 2001, while Kenrich and Azco’s asset-turnover ratios decreased from 0.00145 and 0.04 in 1999 to 0.0001 and 0.004 in 2001 respectively. Therefore, Far West’s better asset-turnover ratio showed that its management was well equipped to generate revenues from its assets.

We were unable to do an inventory-turnover ratio comparison because we do not have the relevant ratios for Kenrich Mining and Far West Mining.