Despite performing well on an operational level and growing sales by more than 10%, several companies in the mining and natural gas sectors failed to impress on the earnings line of their individual income statements. Investors that fail to dive a bit deeper into the results might be scared off during times like this. However, a closer look eases many concerns on a company-specific level.
Because asset prices fluctuate, the values that they carry on a company's financial statements must be adjusted accordingly. Impairment charges frequently stem from this practice and can affect earnings and the appearance of the balance sheet. During periods of falling commodity prices, like the one metals and natural gas endured in 2012, the effects are expectedly negative. The following video details several companies in the mining and natural gas sectors that felt the ill affects of these account rules.
One company involved in both of these industries is Freeport-McMoRan. After putting together a blockbuster deal to expand into the oil and natural gas industry, Freeport-McMoRan will have plenty on its plate as it tries to adapt to the new industry, as expanding into oil and gas carries plenty of inherent volatility. FCX had a profitable copper business, and on top of this foray into a new industry it still has to contend with mining industry bellwether BHP Billiton. To help investors determine if Freeport-McMoRan is a buy or a sell, The Motley Fool has compiled a premium research report on the company. Simply click here now to access your copy today.