course material

1. MBA403 Financial And Economic Interpretation And Communication
Answers:
Resource A – Financial Management Report And Content
Key Performance Indicators
Concise Discussion Of The Key Financial Results And Trends
Based on the horizontal analysis, we can identify how in the last three years, there has been
an increasing trend of the revenue of the company. In addition to this, the cost of goods sold
although reduced from $2,648.00m in 2019 to 2,568.00 in 2020 but again increased to $
2805 during 2021. In this regard, we can identify how there has been a fluctuating trend in
terms of the sales growth of Newcrest Mining (Finance.yahoo.com 2022). In terms of trend
analysis of the sales with the use of horizontal analysis began depict the growth in sales
from 74% to 69% in 2020 and 69% was only 72% in 2021. As per the depiction of the
interest expense, this is also identified with a decreasing trend, as it reduced from 5% in
2020 to -13% in 2021. The overall gross profit margin has been also identified with the
linear increase from 2018 to 2021. This is evident in form of gross profit margin increasing
by 23.27% in 2018, 29.24% in 2019, 34.52% in 2020 and 38.70% in 2021. There is also a
significant growth in the operating profit which is evident with 28% in 2020 to 36% in
2021. It is worth mentioning that Newcrest Mining has been able to make significant
initiative for reducing the overall operating expenses. In this regard, the company has been
able to reduce operating expenses from 22% in 2020 to 14.29% in 2021 (Newcrest.com
.2022a).
The various types of trend observation using the horizontal analysis has been able to
suggest how there has been a significant growth in the basic earnings per share of Newcrest
Mining Limited. In addition to this, the number of basic shares is also slightly increased over
the years. It is worth noting that as per the trends in income and earnings per share
parameters, the net income growth has increased from 15% in 2020 to 80% in 2021
(Newcrest.com. 2022b).
Figure 1: Newcrest Mining Limited Trend from the Horizontal Analysis

2. (Source: As created by the author)
The vertical analysis has been able to demonstrate how the overall current asset of the
company has increased from 16.25% in 2020 to 17.68% in 2021. Along with this, the total
non-current assets have slightly decreased over the years, which is evident with the long
current assets trend of 83.12% in 2017, 83.64% in 2018, 84.08% in 2019, 83.75% in 2020
and 82.32% in 2021. It is important to note that the overall trend of current liabilities has
remained stagnant for Newcrest Mining Limited. This is evident with how the current
liabilities has only changed from 83.75% in 2020 to 82.2% in 2021. Newcrest mining Ltd is
has been successful in reducing its reliance on long-term debts. This is evident in form of
the total long-term debt being reduced from 0.29% from 2018 to 0.22% in 2021. This can
be observed as a great initiative by the company for reducing its dependency on the capital
and rely more on the capital to finance its operations or expansion projects. As per the
Vertical Analysis of Newcrest Mining Limited we are able to understand that the overall
trends in the non-current liabilities have been seen with the reducing trend which is a
positive sign for Newcrest Mining. The trend pertaining to total liabilities on the other hand
can be depicted with an almost stagnant trend as it is changed from 98.88% in 2019 to
98.74% in 2020 and 98.62% in 2021. Based on the vertical analysis we have an also would
identify how the trend of total equity has been demonstrated with the increasing trend. This
is evident in form of the total equity increasing from 1.10% to 1.12% in 2019 and 1.26% to
1.38% as on 2021 (Newcrest.com .2022a).
Figure 2: Newcrest Mining Limited Trend from the Vertical Analysis
(Source: As created by the author)
Presentation And Calculation Of Relevant Financial Ratios
Kindly refer to the list of appendices for all the relevant financial ratios along with their
calculations.
Presentation Of Concise Discussion Of Sustainability And Non-Financial Indicators Along
With Sustainability Indicators
The non-financial indicators include Technology & Innovation and Operating Performance.
In this manner, based on the analysis of non-financial indicators suggest a religion
innovation we can clearly see how this has decreased from 12% in 2019 to 10% in 2020
and 2% in 2021. On the other hand, the operating performance has substantially improved
from 11% in 2019 to 12% in 2020 to 16% in 2021 (Kourtis, Kourtis and Curtis 2019).
The measurement of sustainability indicator using the stability and safety parameter values
we can clearly see that the company’s effort in increasing the stability and safety has
reduced from 11% in 2019, 10% in 2020 to 5% in 2021. On the other hand, the

3. sustainability measure in terms of improving water efficiency has clearly improved from
2% in both 2019 and 2020 to 3% in 2021 (Faccia and Mosco 2019).
Interpretation And Insights
Causes Of Changes In Financial Performance Of The Company
The main reason for the improvement in the growth of total revenue is seen with significant
increase in the production of copper and at the same time due to increasing the price of this
metal over the years, the company has been able to make significant amount of growth in
profit. The copper production itself has been able to contribute 22% of total net revenue
during 2021 (Wild 2019). The significant decrease in interest expense is due to the
decreased reliance on long-term debt such as long-term loans taken from banks. On a
similar note, due to the increased demand of copper, Newcrest Mining has been able to
increase its gross profit margin and operating profit as well (Daryanto 2018).
The continuing trend of reduction in the costs is due to the specific initiatives taken by the
company which has emphasized on low-cost production model and can forward to organic
growth options as stated in the latest annual report of Newcrest Mining Limited. Along with
this, the improving performance of net income is also evident with the aforementioned
factors (Easton et al. 2018). The improvement in the earnings per share is based on the
resuscitation of the investors about the prices of the shares of Newcrest Mining to go up in
the coming years. Moreover, the company has always been able to maintain its position as a
leader in gold exploration and other important minerals, the shareholders has retained
their trust in the company since 2018 to the present year. The vertical analysis of balance
sheet implies that the total current asset has been able to improve as a result of maintaining
higher cash and cash equivalents. In addition to this, as a result of increased fixed assets
such as PPE over the years, the company has been able to improve its total assets as well
(Edmonds et al. 2019).
The rationale for the increase in the current liabilities of numerous mining is evident due to
reduction in trade and other payables, lease liabilities, provisions and current tax liabilities
over the years selected for the analysis. On the other hand, the non-current liabilities have
slightly increased in the recent years due to increase in the short-term borrowings. It is
further worth mentioning that due to increase in the issued capital and plummeting at -
related losses, the total equity has experienced a significant amount of growth over the last
three years (Wild 2019).
Interpretation Of The Financial Ratios
The interpretation of the liquidity ratios such as current ratios and quick ratio enumerates
that the overall durability of Newcrest Mining Ltd to fund its short-term debt obligations
has significantly improved in comparison to the previous year. Such an improvement is
possible with an increasing amount of cash and cash equivalents which is mentioned in the

4. previous sections.
Figure 3: Current Ratio
Figure 4: Quick Ratio
In addition to this, the company is able to collect its debt in a shorter period of time which
is evident with average production period. This is due to the improved selection of
suppliers by the company. Additionally, as a result of maintaining better PPE the fixed asset
turnover ratio has also improved. The stability ratio has been computed by debt ratio and
debt to equity ratio. In terms of debt ratio, it is evident how Newcrest Mining has shown this
reliance on borrowing long-term debts (Li et al. 2018).
Figure 5: Average Collection Period
Figure 6: Fixed Asset Turnover
Figure 7: Total Asset Turnover
Similarly, the plummet in the debt to equity ratio has revealed that the company has been
able to implement more amount of equity finance in contrast to risky debt finance.
Figure 8: Debt Ratio
Figure 9: Debt to Equity Ratio
Based on the analysis of profitability ratio, we are able to understand that due to the
increasing speculation of demand for copper, Newcrest mining Ltd has experienced a
significant improvement in the gross profit margin, net profit margin and operating margin
(Haralayya 2021). In this regard, we are able to identify how the company has been able to
improve its profitability indicators such as ROE, ROA, net profit margin, operating profit
margin and gross profit margin.
Figure 10: Gross Profit Ratio

5. Figure 11: Net Profit Ratio
Figure 12: ROA
Figure 13: ROE
Based on the interpretation of the investment ratios, there has been a significant
improvement in both earnings per share and price-earnings ratio. This suggests that the
company is able to earn more money from its equity shares. This is possible as Newcrest
Mining has been able to retain the confidence of the investors. Furthermore, the price-
earnings ratio of 8.7 in the latest year implies that the share is not overvalued or
undervalued (Jeppesen 2019).
Figure 14: EPS
Figure 15: PE Ratio
Analysis Of The Non-Financial Indicators And Company’s Sustainability Indicator Along
With Ethical Performance
As a result of failure of the company to improve its current technology to the ongoing Covid-
19 pandemic, the non-financial indicators suggest technology and innovation has decreased
substantially. However, the operating performance has improved due to focus on hiring a
greater number of workforce. In terms of sustainability indicators, the reason for decline in
the safe and Sustainable Development is due to increasing cost of using biodegradable
materials. However, the company has tried its best to improve water consumption (Zolfani,
Yazdani and Zavadskas2018).
Company’s Strength, Weakness And Opportunities Analysis Along With Competitor’s
Outlook
Strength
Some of the main strength of the company can be inferred in form of strong resource base
and reserve of gold. Moreover, the current efficiency in the production rate is also
conducive in contributing to higher net income. Additionally, with the present global
workforce of more than 16,000 workers, there has been a tendency of rapid expansion of
markets and operations possible with strategy acquisitions and mergers. In addition to this,
Newcrest Mining Ltd has taken significant initiative in attaining a loyal customer base as a

6. result of being able to be consistent with quality produce (Newcrest.com. 2022b).
Weakness
The unstable copper and gold prices in the international scene have been one of the major
challenges of the company to take ambitious strategic decisions. Furthermore, the
adherence to the cost intensive operations of mines especially in high-cost areas of
production has led to rely on exorbitant capital.
Opportunities
The important form of opportunities identified as per the analysis of annual reports of the
company can be identified with expansion of research in the field of copper and other
extraction activities related to this metal. Along with this, Newcrest Mining to look forward
to acquire a greater number of power plants for developing mines in countries where there
is insufficient source of reliable power. There is also a significant amount of opportunity for
the company in securing large number of mineral districts which can be created through
negotiation with policies pertaining to local government and ensure the sustained growth.
The increasing demand of gold and copper in both America and Asia is also seen as a
promising opportunity for Newcrest Mining in the years to come (Newcrest.com 2022a).
Competitor’s Outlook
Despite of being identified as one of the global leaders in gold exploration, the potential
competitors of Newcrest Mining can be identified with Barrick Gold with a market
capitalisation of over USD 9B. Additionally, Newmont Corporation, DRD Gold, Harmony
Gold Mining Company and Gold Fields can be depicted as all the top competitors
(Finance.yahoo.com 2022).
Conclusion And Recommendation
Based on the interpretation of financial summary, we are able to identify how Newcrest
Mining Ltd has been able to demonstrate a strong financial performance. It is further
expected to gain the confidence of the shareholders and a viable company for investment.
However, in terms of non-financial and sustainability indicators, there are significant scope
of improvement to be made in technology and innovation along with safety and
sustainability measures.
Bibliography And In-Text Citations
Daryanto, W.M., 2018. Financial performance measurement of state-owned enterprises
under aviation to support visit wonderful 2018 in Indonesia. International Journal of
Business, Economics and Law, 16(1), pp.25-39.

7. Easton, P.D., McAnally, M.L., Sommers, G.A. and Zhang, X.J., 2018. Financial statement
analysis & valuation. Boston, MA: Cambridge Business Publishers.
Edmonds, T.P., Edmonds, C.T., Edmonds, M.A., McNair, F.M. and Olds, P.R.,
2019. Fundamental financial accounting concepts. McGraw-Hill Education.
Faccia, A. and Mosco, D., 2019. Understanding the Nature of Accounts Using Comprehensive
Tools to Understand Financial Statements.
Finance.yahoo.com. 2022. Newcrest. Available at:
https://finance.yahoo.com/quote/NCM.AX/profile?p=NCM.AX (Accessed: 22 January 2022).
Haralayya, B., 2021. Ratio Analysis at NSSK, Bidar. Iconic Research And Engineering
Journals, 4(12), pp.170-182.
Jeppesen, K.K., 2019. The role of auditing in the fight against corruption. The British
Accounting Review, 51(5), p.100798.
Kourtis, E., Kourtis, G. and Curtis, P., 2019. An integrated financial ratio analysis as a
navigation compass through the fraudulent reporting conundrum: a case study.
Li, J., Wei, L., Lee, C.F., Zhu, X. and Wu, D., 2018. Financial statements based bank risk
aggregation. Review of Quantitative Finance and Accounting, 50(3), pp.673-694.
Newcrest.com .2022a. Newcrest.com. Available at:
https://www.newcrest.com/sites/default/files/2021-09/20393_Newcrest_AR_2021.pdf
(Accessed: 22 January 2022).
Newcrest.com. 2022b. Welcome. Available at: https://www.newcrest.com/ (Accessed: 22
January 2022).
Wild, J., 2019. Financial Accounting: Information for Decisions, 9e.
Wild, J., 2019. Financial Accounting: Information for Decisions, 9e.
Zolfani, S.H., Yazdani, M. and Zavadskas, E.K., 2018. An extended stepwise weight
assessment ratio analysis (SWARA) method for improving criteria prioritization
process. Soft Computing, 22(22), pp.7399-7405.