KGCKinross Gold

Nine pass-or-fail tests of profitability, balance-sheet strength and efficiency, against the year before.

• Net income positivepassed
• Return on assets positivepassed
• Operating cash flow positivepassed
• Cash flow above net incomepassed
• Long-term debt fallingpassed
• Current ratio risingpassed
• No new shares issuedpassed
• Gross margin risingpassed
• Asset turnover risingpassed

A weighted sum of five balance-sheet ratios that has historically separated companies heading for bankruptcy from the rest.

Working capital / total assets

0.151

Retained earnings / total assets

-0.479

EBIT / total assets

0.264

Market value of equity / total liabilities

9.19

Revenue / total assets

0.568

Eight ratios that tend to move when reported earnings are being flattered. Above −1.78 the model flags the company.

Days' sales in receivables

0.41

Gross margin

0.69

Asset quality

0.95

Sales growth

1.37

Depreciation

1.00

SG&A expense

0.81

Total accruals / assets

-0.104

Leverage

0.82

A model of the probability of default within two years, from size, leverage, liquidity and profitability.

O-Score

-4.71

Total liabilities / total assets

0.299

Working capital / total assets

0.152

Current liabilities / current assets

0.426

Net income / total assets

0.199

How much of reported profit arrived as cash. The Sloan ratio is the accrued, non-cash share of earnings against assets.

Cash flow to net income

1.5×

Cash-flow return on invested capital

27.2%

Dividend payout ratio

10.3%

Free cash flow / dividends

10.1×

Dividend safety

safe