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Tesla, Inc.
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== Notes== '''Bid-ask spread''' The bidโask spread is the difference between the prices quoted for an immediate sale (ask) and an immediate purchase (bid) for the investment. For example, if the price to buy an investment is $663.90 and the price to sell the investment is $663.89, the bid-ask spread of the investment is $0.01 (i.e.$663.90 minus $663.89). Converting the figure into percentage, the bid-ask spread is 0.0015063% (i.e. $0.01 divided by $663.90). '''Investment risk''' Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, itโs best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Tesla's beta is 2.12, and is, accordingly, 112% above the market beta (of 1); assuming that a 'high' level of riskiness is 50% or more above the market beta, then the riskiness of investing in Tesla is considered to be 'high' (112%>50%). '''Current ratio''' The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firm's current assets to its current liabilities, and is expressed as follows:- Current ratio = Current assets divided by current liabilities Acceptable current ratios vary from industry to industry and from business lifecycle stage. '''Quick ratio''' The quick ratio, also known as the acid-test ratio, is a type of liquidity ratio, which measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. It is defined as the ratio between quickly available or liquid assets and current liabilities. Quick assets are current assets that can presumably be quickly converted to cash at close to their book values. A normal liquid ratio is considered to be 1:1. A company with a quick ratio of less than 1 cannot currently fully pay back its current liabilities. The quick ratio is similar to the current ratio, but provides a more conservative assessment of the liquidity position of firms as it excludes inventory, which it does not consider as sufficiently liquid. '''Cash ratio''' The cash ratio is a liquidity measure that shows a company's ability to cover its short-term obligations using only cash and cash equivalents. The cash ratio is derived by adding a company's total reserves of cash and near-cash securities and dividing that sum by its total current liabilities. The cash ratio is more conservative than other liquidity ratios because it only considers a company's most liquid resources. A calculation greater than 1 means a company has more cash on hand than current debts, while a calculation less than 1 means a company has more short-term debt than cash. '''Power purchase agreement''' A power purchase agreement (PPA) is a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer). The agreement defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination. '''Energy capacity''' The energy capacity is defined as the ability of a material to absorb and store energy. '''Kilowatt-hour''' The kilowatt-hour (kWh) is a unit of energy equal to one kilowatt of power sustained for one hour and is commonly used as a measure of electrical energy. One kilowatt-hour is equal to 3600 kilojoules (3.6 megajoules). '''Powerwall annual cost calculation''' {| class="wikitable" |+'''Powerwall annual cost calculation''' !Description !Value !Commentary |- |The cost of Powerall |$10,500 | |- |The lifetime of Powewall |10 years |The warrant of the product is 10 years, so have assumed that the lifetime of Powerwall is the same (i.e. 10 years). |- |The energy capacity of Powerwall |13.5 kilowatt hour | |- |The average energy requirement of a household in the United States |29 kWh per day | |} The annual price of the product = the price of the product divided by the lifetime of the product The annual price of the product = $10,500 / 10 years The annual price of the product = $1,050 The number of Powerwalls that are required to power a household = the average energy requirement of a household in the United States divided by the energy capacity of Powerwall The number of Powerwalls that are required to power a household = 29 kWh per day / 13.5 kWh The number of Powerwalls that are required to power a household = 2.14 The cost for a household to be powered by Powerwalls only = The number of Powerwalls that are required to power a household multiplied by the annual price of the product The cost for a household to be powered by Powerwalls only = 2.14 x $1,050 The cost for a household to be powered by Powerwalls only = $2,247 {| class="wikitable" |+ Risk rating |- ! Rating !! Beta |- | style="background: green; color: white;" |Low || style="background: green; color: white;" |Equal to or below 0.5 |- | style="background: orange; color: white;" |Medium || style="background: orange; color: white;" |Between 0.5 and 1.5 |- | style="background: red; color: white;" |High || style="background: red; color: white;" |Equal to or above 1.5 |}
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