Investopedia Terms

Question 1

a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Answer 1

Asset

Question 2

a financial statement that reports a company’s assets, liabilities, and shareholders’ equity at a specific point in time.

Answer 2

Balance Sheet

Question 3

funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Answer 3

Capital Expenditure (CapEx)

Question 4

the direct costs attributable to the production of the goods sold by a company. This includes the cost of the materials and labor directly used to create the good.

Answer 4

Cost of Goods Sold (COGS)

Question 5

a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year.

Answer 5

Current Ratio

Question 6

a financial ratio indicating the relative proportion of shareholders’ equity and debt used to finance a company’s assets.

Answer 6

Debt-to-Equity Ratio (D/E)

Question 7

an accounting method of allocating the cost of a tangible asset over its useful life.

Answer 7

Depreciation

Question 8

the interest rate used to discount future cash flows of a financial instrument; the rate of return that could be earned on an investment in the financial markets with similar risk.

Answer 8

Discount Rate

Question 9

an indicator of a company’s profitability, calculated as revenue minus expenses, excluding tax and interest.

Answer 9

Earnings Before Interest and Taxes (EBIT)

Question 10

a measure of a company’s overall financial performance and is used as an alternative to net income in some circumstances.

Answer 10

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

Question 11

represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off.

Answer 11

Equity

Question 12

an assessment of the practicality of a proposed plan or project, analyzing its viability to determine if it is likely to succeed.

Answer 12

Feasibility Study

Question 13

written records that convey the business activities and the financial performance of a company.

Answer 13

Financial Statements

Question 14

a complete record of all the financial transactions of a company.

Answer 14

General Ledger

Question 15

the profit a company makes after deducting the costs associated with making and selling its products.

Answer 15

Gross Profit

Question 16

the minimum rate of return on a project or investment required by a manager or investor.

Answer 16

Hurdle Rate

Question 17

a financial statement that shows a company’s revenues and expenses over a specific period.

Answer 17

Income Statement

Question 18

a metric used in capital budgeting to estimate the profitability of potential investments.

Answer 18

Internal Rate of Return (IRR)

Question 19

a financial ratio that shows how many times a company’s inventory is sold and replaced over a period.

Answer 19

Inventory Turnover

Question 20

the total profit of a company after all expenses and taxes have been deducted from revenue.

Answer 20

Net Income

Question 21

the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Answer 21

Net Present Value (NPV)

Question 22

the amount of profit realized from a business’s operations after deducting operating expenses such as wages, depreciation, and cost of goods sold.

Answer 22

Operating Income

Question 23

a profitability ratio that indicates how much profit a company makes from its operations, before subtracting interest and taxes.

Answer 23

Operating Margin

Question 24

a profitability ratio that indicates how much profit a company makes from its operations, before subtracting interest and taxes.

Answer 24

Overhead

Question 25

the current value of a future sum of money or stream of cash flows given a specified rate of return.

Answer 25

Present Value

Question 26

the financial benefit realized when revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Answer 26

Profit

Question 27

summarizes the revenues, costs, and expenses incurred during a specific period, usually a fiscal quarter or year.

Answer 27

Profit and Loss Statement (P&L)

Question 28

measures a company's ability to meet its short-term obligations with its most liquid assets.

Answer 28

Quick Ratio

Question 29

indicates how profitable a company is relative to its total assets.

Answer 29

Return on Assets (ROA)

Question 30

measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

Answer 30

Return on Equity (ROE)

Question 31

a performance measure used to evaluate the efficiency or profitability of an investment.

Answer 31

Return on Investment (ROI)

Question 32

a key metric used to measure an enterprise's ability to meet its debt and other obligations.

Answer 32

Solvency Ratio

Question 33

expenses that change in proportion to the production output.

Answer 33

Variable Cost

Question 34

the difference between a company's current assets and current liabilities.

Answer 34

Working Capital (NWC)

Question 35

An accounting method used to allocate the cost of extracting natural resources over the period they are consumed. It calculates depletion based on the actual quantity extracted relative to the total estimated reserves.

Answer 35

Cost Depletion

Question 36

The revenue received from the sale of mineral products after deducting transportation and refining costs. ________ royalties are payments made to property owners based on this net revenue.

Answer 36

Net Smelter Return (NSR)

Question 37

In surface mining, this ratio compares the volume of overburden (waste material) that must be removed to extract a given amount of ore. A lower ___________ indicates a more economically viable mining operation.

Answer 37

Stripping Ratio

Question 38

The excess profit derived from extracting natural resources, calculated as the difference between total revenue and the sum of extraction costs and normal returns. It reflects the economic value of finite resources.

Answer 38

Resource Rent

Question 39

The production level at which total revenues equal total costs, resulting in neither profit nor loss. In mining, reaching this point is crucial for determining the minimum viable production volume.

Answer 39

Break-even Point

Question 40

The total value that financial markets assign to a company, calculated by multiplying the number of outstanding shares by the current share price. It reflects the company's market value.

Answer 40

Capitalization

Question 41

A payment made by a mining company to the owner of a mineral resource for the right to extract and sell minerals. Royalties are typically a percentage of gross or net revenues.

Answer 41

Royalty

Question 42

Quantities of mineral resources that are economically recoverable under current conditions. _____ are classified as 'Proven' or 'Probable' based on the level of confidence in their existence and economic viability.

Answer 42

Reserves

Question 43

A concentration of minerals with reasonable prospects for economic extraction. Resources are categorized as 'Inferred', 'Indicated', or 'Measured' based on geological evidence and confidence levels.

Answer 43

Mineral Resource

Question 44

An early-stage analysis that evaluates the potential economic viability of a mineral resource. It includes initial estimates of capital and operating costs, production rates, and project economics.

Answer 44

Preliminary Economic Assessment (PEA)

Question 45

Assets that have lost value or become liabilities due to external factors such as regulatory changes or market shifts. In mining, this can occur when resources become uneconomical to extract.

Answer 45

Stranded Asset

Question 46

The funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, or equipment. In mining, this often includes the cost to develop a mine site and infrastructure.

Answer 46

Capital Expenditure (CapEx)

Question 47

The ongoing costs for running a mining operation, including labor, equipment maintenance, utilities, and consumables.

Answer 47

Operating Expenditure (OpEx)

Question 48

The systematic allocation of the cost of a tangible fixed asset over its useful life. In mining, depreciation accounts for the wear and tear on equipment and infrastructure.

Answer 48

Depreciation

Question 49

Similar to depreciation, but it applies to intangible assets or capitalized expenses such as mining rights or exploration costs over time.

Answer 49

Amortization

Question 50

A financial statement that shows the inflows and outflows of cash within a company over a period. It’s critical for assessing a mining project’s liquidity and ability to sustain operations.

Answer 50

Cash Flow Statement

Question 51

A measure of a company's financial leverage, calculated by dividing total liabilities by shareholders' equity. It indicates how much debt is used to finance mining operations versus owner investment.

Answer 51

Debt-to-Equity Ratio

Question 52

The discount rate at which the net present value (NPV) of all cash flows (both positive and negative) from a project equals zero. Used to evaluate the profitability of mining projects.

Answer 52

Internal Rate of Return (IRR)

Question 53

An analysis that assesses how the variation in key input variables (e.g., metal prices, production costs) affects the outcomes (like NPV or IRR) of a mining project.

Answer 53

Sensitivity Analysis

Question 54

The difference between current assets and current liabilities, indicating the liquidity position of a mining company and its ability to cover short-term obligations.

Answer 54

Working Capital

Question 55

Expenses incurred during the search for mineral deposits, including geological surveys, drilling, sampling, and feasibility studies. These are often capitalized or expensed depending on accounting policies.

Answer 55

Exploration Costs

Question 56

The estimated residual value of mining equipment or assets at the end of their useful life. It is used in depreciation calculations.

Answer 56

Salvage Value

Question 57

The time required for an investment (like building a mine) to generate enough cash flow to recover the initial capital expenditure.

Answer 57

Payback Period

Question 58

Raising capital through the sale of shares in the mining company, diluting ownership but avoiding debt.

Answer 58

Equity Financing

Question 59

Raising capital through borrowing, which must be repaid with interest. Common in mining due to high capital requirements.

Answer 59

Debt Financing

Question 60

The price at which a mining asset or company would change hands between a willing buyer and seller, both having reasonable knowledge of the relevant facts.

Answer 60

Fair Market Value

Question 61

A legal obligation associated with the retirement of a tangible long-lived asset, such as mine closure and site reclamation costs.

Answer 61

Asset Retirement Obligation (ARO)

Question 62

An independent examination of financial statements and records to ensure accuracy and compliance with accounting standards.

Answer 62

Audit

Question 63

A financial statement showing a company's assets, liabilities, and shareholders’ equity at a specific point in time.

Answer 63

Balance Sheet

Question 64

The process of improving the economic value of ore by removing impurities through crushing, grinding, and separation.

Answer 64

Beneficiation

Question 65

The process of evaluating and selecting long-term investments, like mine development projects, based on expected returns.

Answer 65

Capital Budgeting

Question 66

The value of an asset on the balance sheet after accounting for depreciation, depletion, or amortization.

Answer 66

Carrying Value

Question 67

Cash Flow from Operations (CFO)

Answer 67

The cash generated by the company's core business activities, crucial for sustaining mining operations.

Question 68

A potential liability that depends on the outcome of a future event, such as environmental cleanup costs.

Answer 68

Contingent Liability

Question 69

Taxes recoverable in future periods due to deductible temporary differences or carryforwards.

Answer 69

Deferred Tax Asset

Question 70

Taxes payable in future periods due to taxable temporary differences between accounting and tax bases of assets and liabilities.

Answer 70

Deferred Tax Liability

Question 71

The reduction in existing shareholders’ ownership percentage due to the issuance of additional shares.

Answer 71

Dilution

Question 72

The interest rate used in discounted cash flow (DCF) analysis to calculate the present value of future cash flows.

Answer 72

Discount Rate

Question 73

A legal authorization to conduct exploration activities on a specific area for mineral resources.

Answer 73

Exploration License

Question 74

The construction of a spreadsheet model to represent a mining project's financial performance and forecast outcomes.

Answer 74

Financial Modeling

Question 75

An inventory valuation method where the oldest inventory items are recorded as sold first.

Answer 75

FIFO (First In, First Out)

Question 76

A set of accounting standards and principles used in financial reporting.

Answer 76

GAAP (Generally Accepted Accounting Principles)

Question 77

A financial strategy to reduce exposure to price fluctuations of commodities like metals.

Answer 77

Hedging

Question 78

A permanent reduction in the recoverable amount of a mine asset below its carrying amount on the balance sheet.

Answer 78

Impairment

Question 79

A mineral resource estimate with sufficient confidence to allow economic and technical evaluation.

Answer 79

Indicated Resource

Question 80

A mineral resource estimate based on limited geological evidence, with lower confidence than indicated or measured resources.

Answer 80

Inferred Resource

Question 81

The first sale of company shares to the public, often used to raise capital for mine development.

Answer 81

Initial Public Offering (IPO)

Question 82

A business arrangement where two or more parties share ownership, risks, and profits of a mining project.

Answer 82

Joint Venture (JV)

Question 83

An inventory valuation method where the most recently acquired inventory is recorded as sold first.

Answer 83

LIFO (Last In, First Out)

Question 84

The total market value of a company's outstanding shares.

Answer 84

Market Capitalization

Question 85

The significance of financial information in influencing the decisions of users.

Answer 85

Materiality

Question 86

A legal contract granting rights to extract minerals from a land area.

Answer 86

Mining Lease

Question 87

The difference between the present value of cash inflows and outflows over a project’s life, indicating profitability.

Answer 87

Net Present Value (NPV)

Question 88

Financial arrangements not recorded on the balance sheet, often used to keep debt off books.

Answer 88

Off-balance Sheet Financing

Question 89

Operating income divided by revenue, showing profitability from core operations.

Answer 89

Operating Margin

Question 90

The rock and soil removed to access mineral deposits in surface mining.

Answer 90

Overburden

Question 91

The amount of metal that a mining company can sell after accounting for processing losses and deductions.

Answer 91

Payable Metal

Question 92

A mineral reserve with a high degree of confidence in its quantity and quality, economically extractable.

Answer 92

Proven Reserve

Question 93

A mineral reserve with a reasonable level of confidence, but less certainty than proven reserves.

Answer 93

Probable Reserve

Question 94

Costs associated with restoring the mining site to its natural state after mining activities cease.

Answer 94

Rehabilitation Costs

Question 95

Accounting principles that define when revenue is considered earned and should be recorded.

Answer 95

Revenue Recognition

Question 96

A performance measure used to evaluate the efficiency of an investment relative to its cost.

Answer 96

Return on Investment (ROI)

Question 97

Payments owed to landowners or governments based on mineral production or revenue.

Answer 97

Royalties Payable

Question 98

Evaluates how different variables impact the financial outcome of a mining project.

Answer 98

Sensitivity Analysis

Question 99

Costs directly associated with mining activities at the mine site, excluding corporate overhead.

Answer 99

Site Operating Costs

Question 100

Residual waste material left after extracting valuable minerals, often stored in tailings ponds.

Answer 100

Tailings

Question 101

The reduction in income taxes due to allowable deductions like depreciation or interest expense.

Answer 101

Tax Shield

Question 102

The ownership percentage in a mining operation responsible for paying operating expenses and capital costs.

Answer 102

Working Interest

Question 103

A reduction in the book value of an asset due to impairment or decreased market value.

Answer 103

Write-down

Question 104

The amount of metal recovered from ore relative to the amount present, expressed as a percentage.

Answer 104

Yield