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==Financials== ccc {| class="wikitable" |+Financials ($'million) |- !Year !'''1''' !'''2''' !'''3''' !'''4''' !'''5''' !'''6''' !'''7''' !!'''8'''!!'''9'''!!'''10'''!!'''11''' !'''12''' !'''13''' !'''14''' !'''15''' !'''16''' !'''17''' !18 !19 !20 !21 !21 !22 |- |'''Year end date''' |'''31/12/1999''' |'''31/12/2000''' |'''31/12/2001''' |'''31/12/2002''' |'''31/12/2003''' |'''31/12/2004'''||'''31/12/2005'''||'''31/12/2006'''||'''31/12/2007'''||'''31/12/2008'''||'''31/12/2009''' |'''31/12/2010''' |'''31/12/2011''' |'''31/12/2012''' |'''31/12/2013''' |'''31/12/2014''' |'''31/12/2015''' |'''31/12/2016''' |'''31/12/2017''' |'''31/12/2018''' |'''31/12/2019''' |'''31/12/2020''' |'''31/12/2021''' |- | colspan="24" |<div style="text-align: center;">'''Income statement'''</div> |- |Revenues ($'million) | | | | | | || || || || || | | | | | | | | | | | | |- |Net profits ($'million) | | | | | | || style="color: red;" | || style="color: red;" | || style="color: red;" | || style="color: red;" | || style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | style="color: red;" | | | |- | colspan="24" |<div style="text-align: center;">'''Balance sheet'''</div> |- |Total assets<br />($'million) | | | | | | | | | | | | | | | | | | | | | | | |- | colspan="24" |<div style="text-align: center;">'''Cash flow'''</div> |- |Cash from operations ($'million) | | | | | | | | | | | | | | | | | | | | | | | |- |Cash from investing ($'million) | | | | | | | | | | | | | | | | | | | | | | | |- |Cash from financing ($'million) | | | | | | | | | | | | | | | | | | | | | | | |} ==== What are the assumptions used to estimate the financial forecasts?==== {| class="wikitable" |+Key inputs !Description !Value !Commentary |- | colspan="3" | <div style="text-align: center;">'''Revenue'''</div> |- |What's the estimated current size of the total addressable market? |$2.3 trillion |Here, the total addressable market (TAM) is defined as the global electric power market, and based on a number of assumptions, it is estimated that the size of the market as of today (11th March 2023), in terms of revenue, is $2.3 trillion. |- |What is the estimated company lifespan? |50 years |Research shows that the average lifespan of a large corporation is around 50 years.<ref>Stadler, Enduring Success, 3β5.</ref> |- |What's the estimated annual growth rate of the total addressable market over the lifecycle of the company? |3% |Research shows that the growth rate of the global electric power market (i.e. the total addressable market) is similar to the growth rate of global gross domestic product, which has averaged (medium) around 3% per year in the last 20 years (2001 to 2022)<ref>https://www.macrotrends.net/countries/WLD/world/gdp-growth-rate</ref>. |- |What's the estimated company peak market share? |1% |We estimate that especially given the experienced team of the company, the peak market share of First Solar is around 1%, and, therefore, suggests using the share amount here. As of ccc, First Solar's current share of the market is ccc%. |- |Which distribution function do you want to use to estimate company revenue? |Gaussian |Research suggests that the revenue pattern of companies is similar to the pattern produced by the Gaussian distribution function (i.e. the revenue distribution is bell shaped)<ref>http://escml.umd.edu/Papers/ObsCPMT.pdf</ref>, so we suggest using that function here. |- |What's the estimated standard deviation of company revenue? | 5.5 years |Another way of asking this question is this way: within how many years either side of the mean does 68% of revenue occur? Based on First Solar's current revenue amount (i.e. $ccc million) and First Solar's estimated lifespan (i.e. 50 years) and First Solar's estimated current stage of its lifecycle (i.e. growth stage), the we suggest using five and a half years (i.e. 68% of all sales happen within five and a half years either side of the mean year), so that's what's used here. |- | colspan="3" |'''<div style="text-align: center;">Growth stages</div>''' |- |How many main stages of growth is the company expected to go through? | 4 stages |Research suggests that a company typically goes through four distinct stages of cash flow growth.<ref>Levie J, Lichtenstein BB (2010) A terminal assessment of stages theory: Introducing a dynamic approach to entrepreneurship. Entrepreneurship: Theory & Practice 34(2): 317β350. <nowiki>https://doi.org/10.1111/j.1540-6520.2010.00377.x</nowiki></ref> Research also shows that incorporating those stages into the discounted cash flow model improves the quality of the model and, ultimately, the quality of the value estimation.<ref>Stef Hinfelaar et al.:, 2019.</ref> In addition, research shows that a key way to determine the stage which a company is in is by examining the cash flow patterns of the company.<ref>Dickinson, 2010.</ref> A summary of the economic links to cash flow patterns can be found in the appendix of this report. We estimate that with First Solar's operating cash flows positive (+), investing cash flows negative (-) and its financing cash flows positive (+), the company is in the second stage of growth (i.e. the 'growth' stage), and, therefore, it has a total of three main stages of growth remaining. |- |What proportion of the company lifecycle is represented by growth stage 1? |30% |Research suggests 30%.<ref name=":6">http://escml.umd.edu/Papers/ObsCPMT.pdf</ref> |- |What proportion of the company lifecycle is represented by growth stage 2? |10% |Research suggests 10%.<ref name=":6" /> |- | What proportion of the company lifecycle is represented by growth stage 3? |20% | Research suggests 20%.<ref name=":6" /> |- |What proportion of the company lifecycle is represented by growth stage 4? |40% |Research suggests 40%.<ref name=":6" /> |- | colspan="3" |'''<div style="text-align: center;">Growth stage 2</div>''' |- |Cost of goods sold as a proportion of revenue (%) |35% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7">http://people.stern.nyu.edu/adamodar/pdfiles/papers/younggrowth.pdf</ref>, and the margin for its peers is 35%. |- |Operating expenses as a proportion of revenue (%) |15% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 15%. |- |Tax rate (%) |12% |Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the rate for its peers is 12%. |- |Depreciation and amortisation as a proportion of fixed capital (%) |10% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the margin for its peers is 10%. |- |Fixed capital as a proportion of revenue (%) |10% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the amount for its peers is 10%. |- |Working capital as a proportion of revenue (%) |15% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 2)<ref name=":7" />, and the amount for its peers is 15%. |- |Net borrowing ($000) |Zero |We suggest that for simplicity, the net borrowing figure is zero. |- |Interest amount ($000) |Zero |We suggest that for simplicity, the interest amount figure is zero. |- | colspan="3" |'''<div style="text-align: center;">Growth stage 3</div>''' |- |Cost of goods sold as a proportion of revenue (%) |45% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 45%. |- |Operating expenses as a proportion of revenue (%) |15% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the margin for its peers is 15%. |- |Tax rate (%) |12% |Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the rate for its peers is 12%. |- |Depreciation and amortisation as a proportion of fixed capital (%) |10% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the amount for its peers is 10%. |- |Fixed capital as a proportion of revenue (%) |10% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 3)<ref name=":7" />, and the amount for its peers is 10%. |- |Working capital as a proportion of revenue (%) |15% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 15%. |- |Net borrowing ($000) |Zero |We suggest that for simplicity, the net borrowing figure is zero. |- |Interest amount ($000) |Zero |We suggest that for simplicity, the interest amount figure is zero. |- | colspan="3" |'''<div style="text-align: center;">Growth stage 4</div>''' |- |Cost of goods sold as a proportion of revenue (%) |55% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 55%. |- |Operating expenses as a proportion of revenue (%) |15% |Research suggests that it's best to use a similar margin rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the margin for its peers is 15%. |- |Tax rate (%) |12% |Research suggests that it's best to use a similar rate as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the rate for its peers is 12%. |- |Depreciation and amortisation as a proportion of fixed capital (%) |10% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 10%. |- |Fixed capital as a proportion of revenue (%) | 10% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 10%. |- |Working capital as a proportion of revenue (%) | 15% |Research suggests that it's best to use a similar amount as the one used by peers that are in the same growth stage (i.e. growth stage 4)<ref name=":7" />, and the amount for its peers is 15%. |- |Net borrowing ($000) |Zero |We suggest that for simplicity, the net borrowing figure is zero. |- |Interest amount ($000) |Zero |We suggest that for simplicity, the interest amount figure is zero. |}
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