You already have a significant investment portfolio, funded in large part by proceeds of stock options received as compensation for your internship at Apple. You have recently received some additional funds and are now wondering how to invest them.

After doing some research, you decided that a good dividend-paying stock is the perfect investment for your new funds. Evaluating your options, you discovered an interesting company by the name of Bling Gold Mines. The company’s stock is publicly traded under the ticker symbol: BLMS. You are particularly interested in this company given its stable history and attractive dividend. Last year BLMS paid a dividend of $3.90 per share, which at the stock’s current price of $22 would give you an annual return of almost 18%. This return is over three times what you can obtain from most major gold mining stocks. In today’s financial climate, a return of almost 18% is one which you’d be very happy with.

Completing a Financial Accounting class has given you the skills to evaluate financial statements. Therefore, you download BLMS’s latest annual report dated December 31, 2014, to evaluate it in order to make a decision on your possible investment. Relevant parts of this report are included below.

After a considerable time pouring through BLMS’s annual report, you decide...

Instructions: Evaluate the excerpts from BLMS’s annual report (shown below) and in two pages or less state whether as a result of your evaluation you invest your funds in BLMS’s shares or not and why. Be decisive! Start by stating whether you would invest in BLMS following with the reason(s) that prompt your decision. HINT: This is not an extremely subjective case or one that easily lends itself to multiple interpretations. There is one fact that is of the utmost relevance and which should drive your decision. Find it!

 
 

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Bling Gold Mines, Inc. CONSOLIDATED STATEMENTS OF INCOME (US dollars in thousands, except per share amounts) Revenue Operating expenses: Production costs Depreciation and depletion. Total cost of sales Exploration, development, and land holding. Corporate general and administrative Income from operations Other income (expense): Interest income Interest expense Foreign exchange gain, net Other income, net Income before income taxes Income tax (expense) benefit Net income Dividends paid Addition to retained earnings Income per share: Basic Diluted Years ended December 31, 2013 134,255 2014 152,573 17,512 38,624 56,136 4,363 17,647 74,427 756 4,545 549 292 70,930 (26,953) 43,977 39,000 4,977 4.40 4.20 **** 16,215 37,867 54,082 4,195 17,472 58,506 648 5,737 671 178 53,595 (20,366) 33,229 29,000 4,229 3.32 3.15 2012 124,379 15,014 37,125 52,139 4,034 17,299 50,907 571 6,102 613 269 45,645 (17,345) 28,300 25,000 3,300 2.83 2.75 2 Bling Gold Mines, Inc. CONSOLIDATED BALANCE SHEETS (US dollars in thousands, except share amounts) Assets: Cash and cash equivalents Accounts receivable, net Inventories Prepaids and other Current assets Restricted cash Other assets, non-current Plant and equipment, net Mineral properties, net Total assets Liabilities: Accounts payable Interest payable Other liabilities, current Debt, current Deferred tax liabilities, current Current liabilities Other liabilities, non-current Debt, non-current Deferred tax liabilities, non-current Total liabilities Shareholders' Equity: Common stock, $0.001 par Shares issued and outstanding: 2012-10,000,000 and 2011-10,000,000 Additional paid-in-capital Treasury stock Retained earnings Total shareholders' equity Total liabilities and shareholders' equity As Of December 31, 2014 2013 17,932 23,522 15,814 1,164 58,432 11,810 3,069 24,153 61,521 158,985 5.011 992 993 1,999 1,006 10,001 37 54,068 1,026 65,132 10 70,631 (2,490) 25,702 93,853 158,985 16,145 16,847 14,220 984 48,196 11,762 2,962 31.244 92,341 186,505 4,490 978 901 2,023 989 9,381 11,788 74,004 976 96,149 10 70.631 (1,010) 20,725 90,356 186,505 3 Bling Gold Mines, Inc. CONSOLIDATED STATEMENTS OF INCOME (US dollars in thousands, except per share amounts) Revenue Operating expenses: Production costs Depreciation and depletion. Total cost of sales Exploration, development, and land holding. Corporate general and administrative Income from operations Other income (expense): Interest income Interest expense Foreign exchange gain, net Other income, net Income before income taxes Income tax (expense) benefit Net income Dividends paid Addition to retained earnings Income per share: Basic Diluted Years ended December 31, 2013 134,255 2014 152,573 17,512 38,624 56,136 4,363 17,647 74,427 756 4,545 549 292 70,930 (26,953) 43,977 39,000 4,977 4.40 4.20 **** 16,215 37,867 54,082 4,195 17,472 58,506 648 5,737 671 178 53,595 (20,366) 33,229 29,000 4,229 3.32 3.15 2012 124,379 15,014 37,125 52,139 4,034 17,299 50,907 571 6,102 613 269 45,645 (17,345) 28,300 25,000 3,300 2.83 2.75 2 Bling Gold Mines, Inc. CONSOLIDATED BALANCE SHEETS (US dollars in thousands, except share amounts) Assets: Cash and cash equivalents Accounts receivable, net Inventories Prepaids and other Current assets Restricted cash Other assets, non-current Plant and equipment, net Mineral properties, net Total assets Liabilities: Accounts payable Interest payable Other liabilities, current Debt, current Deferred tax liabilities, current Current liabilities Other liabilities, non-current Debt, non-current Deferred tax liabilities, non-current Total liabilities Shareholders' Equity: Common stock, $0.001 par Shares issued and outstanding: 2012-10,000,000 and 2011-10,000,000 Additional paid-in-capital Treasury stock Retained earnings Total shareholders' equity Total liabilities and shareholders' equity As Of December 31, 2014 2013 17,932 23,522 15,814 1,164 58,432 11,810 3,069 24,153 61,521 158,985 5.011 992 993 1,999 1,006 10,001 37 54,068 1,026 65,132 10 70,631 (2,490) 25,702 93,853 158,985 16,145 16,847 14,220 984 48,196 11,762 2,962 31.244 92,341 186,505 4,490 978 901 2,023 989 9,381 11,788 74,004 976 96,149 10 70.631 (1,010) 20,725 90,356 186,505 3

Answer rating: 100% (QA)

Bling Gold Mines Inc Based on the below reasons even though the performance of the comapny is very g... View the full answer