Case Study Analysis and Solutions

Case ID: 113044

Abstract:
Case Solution & Analysis for First Solar: CFRA's Accounting Quality Concerns by Suraj Srinivasan, Ian McKown Cornell
The case relates to accounting quality analysis conducted by the leading research firm Center for Financial Research and Analysis (CFRA) on companies in the solar industry with a focus on First Solar Inc. In 2009, CFRA was concerned that First Solar, like much of the solar industry, was facing deterioration in business prospects and exposed to risks arising from revenue recognition, high inventory levels, lack of customer and geographic diversification, aggressive warranty policies, excessive production capacity growth, and supply chain risks. The case places students in the shoes of CFRA analysts who need to assess First Solar's accounting quality and business prospects after the company releases its second quarter financial numbers in 2009. The case provides students with background information on the solar power industry, First Solar, data from CFRA research, and First Solar's quarterly reports and the earnings conference call to analyze and draw conclusions about First Solar's accounting practices and strength as a company. Students have to decide whether CFRA should flag First Solar as a concern and add it to CFRA's "Biggest Concerns" list.

Keywords:
Accounting, Corruption, Crime, Earnings, Energy, Financial accounting, Financial statements, Management, Quality management, Risk; Technology, Uncertainty, Valuation, First Solar CFRA's Accounting Quality Concerns Case Solution

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