Store 24 Case Study Solution Report

...First Solar CaseAnalysis Due to consideration of rising energy demand, global warming and nature of solar power, the solar industry has experienced a rapid development these years. First Solar, as one of the dominant companies in the industry, is suspected and scrutinized by CFRA for aggressive accounting practices. CFRA’s investigation aims at identifying potential risks in several areas, including revenue quality and recognition, inventory levels, customer and geographic diversification, warranty policies, production capacity growth, and supply chain. This case focuses on whether CFRA should flag First Solar and add it to the “biggest concern” list. The stock of First Solar has always been popular among investors considering the company’s outstanding performance. The price-to-earnings ratios of First Solar from the last three years (2006 to 2008) were much higher than the industry average ratios. Therefore, it is reasonable to speculate that prospects for earnings in the future are great. Furthermore, positive opinions from the professional institutions, such as “outperform” and “buy”, gave investors much confidence. The analysts, as well as investors, believed that sustainable increasing earnings and new market expansion could provide solid growth prospects for First Solar. Business Environment Analysis – PEST Analysis Solar energy acting as a promising alternative energy marks a bright future of...

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