Discussing the Financial Decisions of Tesla Inc.

Financial Decisions
Name
FIN B386F
Institution
Date
Company background
Tesla Inc. (Tesla) is an automotive and Energy Company that designs, develops, manufactures, and sells, and even leases electric vehicles and is involved in energy generation and storage systems. In reporting revenues, the company focuses on the automotive & services and other segments and the energy generation and storage segment and aggregates data from both segments. 
The company's stock prices $705.67 on 31st December 2020 and $729.77on 4th January 2021 $729.77, and on 31st March 2021, the last day of the first quarter, the stock was valued at $667.93 (Yahoo Finance, 2021). The stock has generally been on an upward trend in the last quarter of 2020, but the price has fluctuated in the first quarter of 20221, with the value in March and April being below that of January 2021. Shortage of parts and increase in expenses are some of the reasons why Tesla's stock has fallen in 2021, with the coronavirus pandemic causing supply chain disruptions. According to Kay (2021), Tesla's founder and CEO Elon Musk highlighted that the pandemic caused a global microchip shortage and supply chain challenges that affected Tesla's production capacity. 
Tesla has focused on maintaining the company's capabilities and deliveries to mitigate risks associated with the coronavirus pandemic. The automotive industry requires semiconductor chips, and the electric vehicle market has various models of chip-reliant vehicles, and the price of the chips has increased. Lost production means that there are also lost sales and opportunities to expand the international market.
Source Google.com
Yahoo Finance (2021) reports that Tesla's return on capital employed (ROCE) has increased in the past few years now that the company recorded a profit in the last financial year. Tesla reported a ROCE of 5.1% in 2020, which was lower than the auto industry average of 8.8%, but still better than the -7.8% in 2017 (Yahoo Finance (2021). A higher ROCE ratio indicates that the company is reinvesting back into the company, and there are higher returns as the profitability levels improve. The return on equity was also negative in the past five years, but there has been a gradual improvement in both the ROCE and the ROE. The company has used more capital than before to fund operations and growth, which further spurs growth.
Derivatives in risk management and speculation
Tesla operates in different countries, increasing exposure to foreign exchange risk as the exchange rates fluctuate over time. The foreign exchange gains and losses are reported for the foreign currency-denominated monetary assets and liabilities (Tesla).  Reducing foreign currency fluctuations helps manage earnings volatility earnings and cash flow, focusing on probably committed transactions. Evaluating the derivative positions required forecasting the foreign exchange exposures to determine the risk level.
Tesla made its first profit in 2020 compared to the previous five years and relied on debt to finance operations when the company reported losses. However, there has been speculation that the company would expand operations in the international market, and this caused the stock value...