Elon Musk Says He's Worried About Keeping Tesla Out of Bankruptcy!!! Key words and Definitions ...

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Elon Musk Says He's Worried About Keeping Tesla Out of Bankruptcy!!! Key words and Definitions • Bankruptcy - a legal process where a firm that is unable to repay creditors can seek relief from some or all of its debts. • Net working capital - the difference between a company's current assets and its current liabilities. • Net income - revenues minus expenses, taxes, and interest. Also called profit. Summary: Key Points in the Article. Elon Musk's recent comments about Tesla losses and the potential for bankruptcy put investors on notice. Tesla lost billions due to Covid lockdowns in China, supply chain disruptions in Texas and Germany, and the cost of bringing new plants online. Musk told a Tesla owners' group the firm was "not out of it yet." Musk went on to state that he was concerned about how to keep factories operating and pay workers. He also said that "automakers in general "desperately want to go bankrupt."" Tesla's Shanghai factory was closed for weeks due to Covid and supply chain issues were creating huge losses for new factories in Texas and Germany since their output was almost nonexistent. One analyst, Gordon Johnson of GLJ Research, stated the threat of a Tesla bankruptcy was real given that most of the firm's profits were attributed to the Chinese operations and China does not allow repatriation of profits. Johnson also stated that Tesla's decision to fire 10% of its salaried workers also points to cash flow issues. Tesla's stock price fell about 2% after the news became public. For the Full Article-Click Here !!! Thinking Critically and Answer Following Questions: 1. What does it mean to not allow repatriation of earnings? What does it imply to the managerial goals? 2. Why is Elon Musk concerned about a Tesla bankruptcy? 3. How would bankruptcy help Tesla? 4. How Tesla could potentially maximize shareholder wealth under the current situation? Elon Musk Says He's Worried About Keeping Tesla Out of Bankruptcy!!! Key words and Definitions • Bankruptcy - a legal process where a firm that is unable to repay creditors can seek relief from some or all of its debts. • Net working capital - the difference between a company's current assets and its current liabilities. • Net income - revenues minus expenses, taxes, and interest. Also called profit. Summary: Key Points in the Article. Elon Musk's recent comments about Tesla losses and the potential for bankruptcy put investors on notice. Tesla lost billions due to Covid lockdowns in China, supply chain disruptions in Texas and Germany, and the cost of bringing new plants online. Musk told a Tesla owners' group the firm was "not out of it yet." Musk went on to state that he was concerned about how to keep factories operating and pay workers. He also said that "automakers in general "desperately want to go bankrupt."" Tesla's Shanghai factory was closed for weeks due to Covid and supply chain issues were creating huge losses for new factories in Texas and Germany since their output was almost nonexistent. One analyst, Gordon Johnson of GLJ Research, stated the threat of a Tesla bankruptcy was real given that most of the firm's profits were attributed to the Chinese operations and China does not allow repatriation of profits. Johnson also stated that Tesla's decision to fire 10% of its salaried workers also points to cash flow issues. Tesla's stock price fell about 2% after the news became public. For the Full Article-Click Here !!! Thinking Critically and Answer Following Questions: 1. What does it mean to not allow repatriation of earnings? What does it imply to the managerial goals? 2. Why is Elon Musk concerned about a Tesla bankruptcy? 3. How would bankruptcy help Tesla? 4. How Tesla could potentially maximize shareholder wealth under the current situation?

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1 Not allowing repatriation of earnings means that profits earned in a foreign country cannot be tra... View the full answer