Mining for metals and gold has been an integral part of human history since ancient times. From the Bronze Age to modern day, mining has provided a valuable source of raw material for use in tools, weapons, artwork and even currency. The importance of metal and gold mining is far reaching; it provides jobs to thousands around the world while also contributing significantly to global economic growth. Mining is an essential part of the global economy, with metal mining playing a particularly important role. Metal mining involves extracting metals from naturally occurring ores, such as copper ore and gold ore....
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We know that money has two general purposes: it serves as a store of value and as a medium of exchange. The term time value of money refers to all aspects of converting the value of cash flows at one point of time to their equivalent values at another time. It is important that we know the value of current and future cash flows to facilitate the financial planning process.
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Financial statement analysis is useful to anticipate future conditions and, most important, as a starting point for developing strategies that influence a company's future course of business.
An important step toward achieving these goals is to analyze the firm's financial ratios. Ratios are designed to highlight relationships between the financial statement accounts. These relationships begin to reveal how well a company is doing in its primary goal of creating value for its shareholders.
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The “what if” dimension means that in case the new idea works out well, then the company might have significant value; otherwise, it will not.
For example, considering a mining company, in case explorations are successful, then the company will be valuable; if on the other hand explorations are not successful then the company might not even be surviving.
This is exactly how options work and we can use the same option pricing theory to value such real-world cases.