Peabody Energy Financial Assessment

Contents

Introduction 3

Financial Statement Analysis 4

Standard Cost 10

Analyzing Future Projects 12

Recommendations 14

Appendices 15

Works Cited 22

Section I: Introduction

Peabody Energy Corporation is a coal energy company and the world’s largest private-sector coal producer in the world. (Hoovers, 2011) Peabody was founded in 1883 as a coal supplier and later began coal mining in 1926. (Hoovers, 2011) Currently, Peabody operates roughly 28 mines and processing facilities and, additionally, markets, brokers and trades coal. (New York Times) Peabody Energy Corporation’s principal goods and services include coal trading and brokering, coalbed methane production, tranportation-related services, and development of coal-based generating plants. (Hoovers, 2011) Peabody sells about 245 million tons of coal annually and owns and maintains a reserve of roughly 9 billion tons of coal. (Hoovers, 2011) Peabody is based out of St. Louis Missouri and primarily operates in mines across the United States and Australia. [Additional information on Peabody’s international operations can be found in Appendix A.]

For 2010, Peabody Energy Corp. produced 191,943,000 short tons of coal, consisting of 17.7 percent of the total production in the United states. Its closest competitor, Arch Coal Inc., produced just 1.7 percent lower with 16.0 percent. Cloud Peak Energy, Alpha Natural Resources LLC, and CONSUL Energy Inc. followed, producing 8.6, 7.4, and 5.7 percent respectively. [See Appendix B]

Section II: Financial Statement Analysis

Financial statement analysis is a tool used to assess the health and maturity of a company’s financial data. Using analysis tools, the financial statements will provide relationships between the items of data to gauge the present and future performance of the company. The financial analysis statement provides information for creditors, investors, and managers. Creditors use these techniques in order to assess...