Intrinsic value of Kinross Gold - KGC

Previous Close

$3.82

  Intrinsic Value

$0.80

stock screener

  Rating & Target

str. sell

-79%

Previous close

$3.82

 
Intrinsic value

$0.80

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of KGC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.76
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  3,472
  3,541
  3,623
  3,716
  3,821
  3,936
  4,063
  4,202
  4,352
  4,513
  4,686
  4,872
  5,069
  5,280
  5,503
  5,741
  5,992
  6,259
  6,540
  6,838
  7,152
  7,484
  7,833
  8,202
  8,590
  8,999
  9,430
  9,883
  10,360
  10,861
  11,389
Variable operating expenses, $m
 
  4,412
  4,513
  4,629
  4,759
  4,903
  5,060
  5,232
  5,418
  5,618
  5,833
  6,047
  6,292
  6,554
  6,831
  7,126
  7,438
  7,769
  8,119
  8,488
  8,878
  9,289
  9,723
  10,181
  10,663
  11,171
  11,705
  12,268
  12,860
  13,482
  14,137
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,426
  4,412
  4,513
  4,629
  4,759
  4,903
  5,060
  5,232
  5,418
  5,618
  5,833
  6,047
  6,292
  6,554
  6,831
  7,126
  7,438
  7,769
  8,119
  8,488
  8,878
  9,289
  9,723
  10,181
  10,663
  11,171
  11,705
  12,268
  12,860
  13,482
  14,137
Operating income, $m
  46
  -871
  -891
  -913
  -938
  -966
  -997
  -1,030
  -1,066
  -1,105
  -1,147
  -1,176
  -1,223
  -1,274
  -1,328
  -1,385
  -1,446
  -1,510
  -1,578
  -1,650
  -1,726
  -1,806
  -1,890
  -1,979
  -2,073
  -2,172
  -2,275
  -2,385
  -2,500
  -2,621
  -2,748
EBITDA, $m
  901
  -18
  -18
  -19
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
Interest expense (income), $m
  74
  69
  73
  76
  80
  85
  90
  96
  102
  108
  116
  123
  131
  140
  149
  159
  170
  181
  193
  205
  218
  232
  247
  262
  279
  296
  314
  333
  353
  374
  396
Earnings before tax, $m
  -60
  -940
  -963
  -989
  -1,018
  -1,051
  -1,087
  -1,126
  -1,168
  -1,214
  -1,263
  -1,299
  -1,355
  -1,414
  -1,477
  -1,545
  -1,616
  -1,691
  -1,771
  -1,855
  -1,944
  -2,038
  -2,137
  -2,241
  -2,351
  -2,467
  -2,589
  -2,718
  -2,853
  -2,995
  -3,144
Tax expense, $m
  49
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -104
  -940
  -963
  -989
  -1,018
  -1,051
  -1,087
  -1,126
  -1,168
  -1,214
  -1,263
  -1,299
  -1,355
  -1,414
  -1,477
  -1,545
  -1,616
  -1,691
  -1,771
  -1,855
  -1,944
  -2,038
  -2,137
  -2,241
  -2,351
  -2,467
  -2,589
  -2,718
  -2,853
  -2,995
  -3,144

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  827
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,979
  7,302
  7,470
  7,662
  7,877
  8,116
  8,378
  8,664
  8,972
  9,305
  9,662
  10,044
  10,452
  10,886
  11,347
  11,837
  12,356
  12,905
  13,485
  14,099
  14,747
  15,430
  16,151
  16,911
  17,711
  18,555
  19,442
  20,377
  21,360
  22,395
  23,483
Adjusted assets (=assets-cash), $m
  7,152
  7,302
  7,470
  7,662
  7,877
  8,116
  8,378
  8,664
  8,972
  9,305
  9,662
  10,044
  10,452
  10,886
  11,347
  11,837
  12,356
  12,905
  13,485
  14,099
  14,747
  15,430
  16,151
  16,911
  17,711
  18,555
  19,442
  20,377
  21,360
  22,395
  23,483
Revenue / Adjusted assets
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
  0.485
Average production assets, $m
  4,756
  4,852
  4,963
  5,091
  5,234
  5,393
  5,567
  5,757
  5,962
  6,183
  6,420
  6,674
  6,945
  7,233
  7,540
  7,865
  8,210
  8,574
  8,960
  9,368
  9,798
  10,253
  10,732
  11,236
  11,768
  12,329
  12,919
  13,539
  14,193
  14,880
  15,603
Working capital, $m
  1,443
  627
  641
  658
  676
  697
  719
  744
  770
  799
  829
  862
  897
  935
  974
  1,016
  1,061
  1,108
  1,158
  1,210
  1,266
  1,325
  1,386
  1,452
  1,520
  1,593
  1,669
  1,749
  1,834
  1,922
  2,016
Total debt, $m
  1,733
  1,814
  1,904
  2,007
  2,122
  2,250
  2,391
  2,544
  2,709
  2,888
  3,079
  3,284
  3,502
  3,735
  3,982
  4,245
  4,523
  4,817
  5,128
  5,457
  5,804
  6,171
  6,557
  6,964
  7,393
  7,845
  8,321
  8,822
  9,349
  9,904
  10,487
Total liabilities, $m
  3,834
  3,914
  4,004
  4,107
  4,222
  4,350
  4,491
  4,644
  4,809
  4,988
  5,179
  5,384
  5,602
  5,835
  6,082
  6,345
  6,623
  6,917
  7,228
  7,557
  7,904
  8,271
  8,657
  9,064
  9,493
  9,945
  10,421
  10,922
  11,449
  12,004
  12,587
Total equity, $m
  4,146
  3,388
  3,466
  3,555
  3,655
  3,766
  3,888
  4,020
  4,163
  4,318
  4,483
  4,661
  4,850
  5,051
  5,265
  5,492
  5,733
  5,988
  6,257
  6,542
  6,842
  7,160
  7,494
  7,847
  8,218
  8,609
  9,021
  9,455
  9,911
  10,391
  10,896
Total liabilities and equity, $m
  7,980
  7,302
  7,470
  7,662
  7,877
  8,116
  8,379
  8,664
  8,972
  9,306
  9,662
  10,045
  10,452
  10,886
  11,347
  11,837
  12,356
  12,905
  13,485
  14,099
  14,746
  15,431
  16,151
  16,911
  17,711
  18,554
  19,442
  20,377
  21,360
  22,395
  23,483
Debt-to-equity ratio
  0.418
  0.540
  0.550
  0.560
  0.580
  0.600
  0.610
  0.630
  0.650
  0.670
  0.690
  0.700
  0.720
  0.740
  0.760
  0.770
  0.790
  0.800
  0.820
  0.830
  0.850
  0.860
  0.870
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.950
  0.960
Adjusted equity ratio
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -104
  -940
  -963
  -989
  -1,018
  -1,051
  -1,087
  -1,126
  -1,168
  -1,214
  -1,263
  -1,299
  -1,355
  -1,414
  -1,477
  -1,545
  -1,616
  -1,691
  -1,771
  -1,855
  -1,944
  -2,038
  -2,137
  -2,241
  -2,351
  -2,467
  -2,589
  -2,718
  -2,853
  -2,995
  -3,144
Depreciation, amort., depletion, $m
  855
  853
  872
  894
  919
  946
  976
  1,009
  1,044
  1,082
  1,123
  1,151
  1,197
  1,247
  1,300
  1,356
  1,415
  1,478
  1,545
  1,615
  1,689
  1,768
  1,850
  1,937
  2,029
  2,126
  2,227
  2,334
  2,447
  2,566
  2,690
Funds from operations, $m
  1,272
  -87
  -91
  -95
  -100
  -105
  -111
  -117
  -124
  -131
  -139
  -148
  -157
  -167
  -177
  -189
  -200
  -213
  -226
  -240
  -255
  -270
  -287
  -304
  -322
  -342
  -362
  -383
  -406
  -429
  -454
Change in working capital, $m
  173
  12
  14
  16
  19
  21
  22
  24
  27
  29
  31
  33
  35
  37
  40
  42
  45
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
Cash from operations, $m
  1,099
  -100
  -105
  -112
  -118
  -125
  -133
  -142
  -150
  -160
  -170
  -181
  -192
  -204
  -217
  -231
  -245
  -260
  -276
  -293
  -310
  -329
  -349
  -369
  -391
  -414
  -438
  -463
  -490
  -518
  -548
Maintenance CAPEX, $m
  0
  -820
  -837
  -856
  -878
  -902
  -930
  -960
  -993
  -1,028
  -1,066
  -1,107
  -1,151
  -1,197
  -1,247
  -1,300
  -1,356
  -1,415
  -1,478
  -1,545
  -1,615
  -1,689
  -1,768
  -1,850
  -1,937
  -2,029
  -2,126
  -2,227
  -2,334
  -2,447
  -2,566
New CAPEX, $m
  -634
  -96
  -112
  -128
  -143
  -159
  -174
  -190
  -205
  -221
  -237
  -254
  -271
  -288
  -307
  -325
  -345
  -365
  -386
  -408
  -430
  -454
  -479
  -505
  -532
  -560
  -590
  -621
  -653
  -687
  -723
Cash from investing activities, $m
  -1,270
  -916
  -949
  -984
  -1,021
  -1,061
  -1,104
  -1,150
  -1,198
  -1,249
  -1,303
  -1,361
  -1,422
  -1,485
  -1,554
  -1,625
  -1,701
  -1,780
  -1,864
  -1,953
  -2,045
  -2,143
  -2,247
  -2,355
  -2,469
  -2,589
  -2,716
  -2,848
  -2,987
  -3,134
  -3,289
Free cash flow, $m
  -171
  -1,015
  -1,054
  -1,095
  -1,139
  -1,187
  -1,237
  -1,291
  -1,348
  -1,409
  -1,473
  -1,542
  -1,614
  -1,690
  -1,771
  -1,856
  -1,946
  -2,040
  -2,140
  -2,245
  -2,356
  -2,473
  -2,595
  -2,724
  -2,860
  -3,003
  -3,154
  -3,312
  -3,478
  -3,653
  -3,836
Issuance/(repayment) of debt, $m
  -250
  81
  90
  103
  116
  128
  140
  153
  166
  178
  191
  205
  219
  233
  247
  262
  278
  294
  311
  329
  347
  366
  386
  407
  429
  452
  476
  501
  527
  554
  583
Issuance/(repurchase) of shares, $m
  279
  1,009
  1,041
  1,078
  1,118
  1,162
  1,208
  1,258
  1,311
  1,368
  1,428
  1,476
  1,544
  1,616
  1,691
  1,772
  1,856
  1,946
  2,040
  2,140
  2,245
  2,355
  2,472
  2,594
  2,723
  2,858
  3,001
  3,151
  3,309
  3,475
  3,649
Cash from financing (excl. dividends), $m  
  -48
  1,090
  1,131
  1,181
  1,234
  1,290
  1,348
  1,411
  1,477
  1,546
  1,619
  1,681
  1,763
  1,849
  1,938
  2,034
  2,134
  2,240
  2,351
  2,469
  2,592
  2,721
  2,858
  3,001
  3,152
  3,310
  3,477
  3,652
  3,836
  4,029
  4,232
Total cash flow (excl. dividends), $m
  -217
  75
  77
  86
  95
  103
  112
  120
  129
  138
  146
  139
  148
  158
  168
  178
  189
  200
  212
  223
  236
  249
  263
  277
  292
  307
  323
  340
  358
  377
  396
Retained Cash Flow (-), $m
  -257
  -1,009
  -1,041
  -1,078
  -1,118
  -1,162
  -1,208
  -1,258
  -1,311
  -1,368
  -1,428
  -1,476
  -1,544
  -1,616
  -1,691
  -1,772
  -1,856
  -1,946
  -2,040
  -2,140
  -2,245
  -2,355
  -2,472
  -2,594
  -2,723
  -2,858
  -3,001
  -3,151
  -3,309
  -3,475
  -3,649
Prev. year cash balance distribution, $m
 
  827
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -108
  -964
  -992
  -1,024
  -1,059
  -1,097
  -1,138
  -1,183
  -1,231
  -1,282
  -1,337
  -1,395
  -1,457
  -1,523
  -1,593
  -1,668
  -1,746
  -1,829
  -1,916
  -2,009
  -2,106
  -2,209
  -2,317
  -2,431
  -2,551
  -2,678
  -2,811
  -2,951
  -3,098
  -3,253
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -103
  -882
  -863
  -843
  -821
  -796
  -769
  -739
  -707
  -672
  -635
  -595
  -554
  -511
  -468
  -424
  -380
  -337
  -295
  -255
  -218
  -183
  -152
  -124
  -99
  -78
  -60
  -46
  -34
  -24
Current shareholders' claim on cash, %
  100
  79.0
  62.3
  49.0
  38.4
  30.1
  23.5
  18.3
  14.3
  11.1
  8.6
  6.7
  5.2
  4.0
  3.1
  2.4
  1.9
  1.4
  1.1
  0.8
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0

Kinross Gold Corporation is a gold mining company. The Company is engaged in gold mining and related activities, including exploration and acquisition of gold-bearing properties, the extraction and processing of gold-containing ore, and reclamation of gold mining properties. The Company's segments include Fort Knox, Round Mountain, Bald Mountain, Kettle River-Buckhorn, Kupol, Paracatu, Maricunga, Tasiast and Chirano. Fort Knox is an open-pit gold mine located in Fairbanks, Alaska. Round Mountain open-pit mine is located in Nye County, Nevada. Bald Mountain open-pit mine is located in Nevada. Kettle River-Buckhorn mine is located in northern Washington State. The Kupol segment includes the Kupol and Dvoinoye mines. Paracatu is a gold mine located in the State of Minas Gerais, Brazil. Maricunga open pit mine is located in Copiapo, Chile. Tasiast mine is located in north-western Mauritania. Chirano is located in southwestern Ghana.

FINANCIAL RATIOS  of  Kinross Gold (KGC)

Valuation Ratios
P/E Ratio -45.7
Price to Sales 1.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow 10.2
Growth Rates
Sales Growth Rate 13.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 3.9%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 41.8%
Total Debt to Equity 41.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. -7.5%
Return On Total Capital -1.8%
Ret/ On T. Cap. - 3 Yr. Avg. -10.9%
Return On Equity -2.6%
Return On Equity - 3 Yr. Avg. -15.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 18.2%
Gross Margin - 3 Yr. Avg. 15.5%
EBITDA Margin 25%
EBITDA Margin - 3 Yr. Avg. 5.4%
Operating Margin 1.3%
Oper. Margin - 3 Yr. Avg. -19.2%
Pre-Tax Margin -1.7%
Pre-Tax Margin - 3 Yr. Avg. -22.5%
Net Profit Margin -3%
Net Profit Margin - 3 Yr. Avg. -23%
Effective Tax Rate -81.7%
Eff/ Tax Rate - 3 Yr. Avg. -35.5%
Payout Ratio 0%

KGC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KGC stock intrinsic value calculation we used $3472 million for the last fiscal year's total revenue generated by Kinross Gold. The default revenue input number comes from 2016 income statement of Kinross Gold. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KGC stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for KGC is calculated based on our internal credit rating of Kinross Gold, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Kinross Gold.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KGC stock the variable cost ratio is equal to 124.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KGC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4% for Kinross Gold.

Corporate tax rate of 27% is the nominal tax rate for Kinross Gold. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KGC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KGC are equal to 137%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Kinross Gold operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KGC is equal to 17.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4146 million for Kinross Gold - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1242.79 million for Kinross Gold is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Kinross Gold at the current share price and the inputted number of shares is $4.7 billion.

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Financial statements of KGC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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