Tesla Inc. Financial Analysis

Founded in 2003, Tesla Company is the world’s most re-known company established to manufacture electric vehicles to enhance a quicker, comfortable, and better drive than gasoline vehicles. The company’s common stock is traded under NASDAQ with a market symbol of TSLA, which began trading within the stock exchange market in 2010. The company’s mission is to “accelerate the world’s transition to sustainable energy” (“Tesla Inc,” n.d.). With its marketing strategies, the company is entitled to long-term play in the market niche, focusing on an electric automobile, battery technology, automation, and environment-friendly product and services. This report analyzes the company’s financial statement from the annual reports of 10-K.

The statement of financial position or the balance sheet indicates a company’s financial position at a particular period. The balance sheet displays an organization’s assets, liabilities, and shareholder’s equity (“Basics of Financial Statement Analysis,” 2019). Assets in financial accounting are a resource that controls or is owned by a business or an economic entity. Assets produce an economic impact within a business (“Basics of Financial Statement Analysis,” 2019). According to the financial statements, balance sheet, for Tesla Company as of 2018, total assets amounted to $ 29.739 Billion, which was an increase of 3.78% from the previous year (“Tesla Inc,” n.d.). Assets accounted included both current assets and fixed assets. Current assets included restricted cash, inventory, net account receivables, prepared expenses, and all cash and cash equivalents within the company. Fixed assets included operating lease vehicles, the entire solar energy system, goodwill, intangible assets, customer notes, property, plant and equipment, and other assets. Operating lease vehicles relate to all vehicles that operate based on pay as you use agreement. This amounted to $ 2.089 billion within the year. However, this amount was a shortfall from the previous year, 2017, indicating that the company had reduced its operations in leasing assets (“Tesla Inc,” n.d.).

Liabilities indicate an organization’s amount obliged to make payments in the future. Tesla liabilities increased by $ 403,030,000 in the year 2018. Liabilities accounted for included current liabilities such as accounts payables, deferred revenue, customer deposits, resale value guarantees, and long-term liabilities amounting to $ 13.43 billion (“Tesla Inc,” n.d.). An increase in liabilities indicates that the company increased its sources of funds hence cash inflows. Included in the statement of financial position, Tesla shareholder’s equity. This included common stock sold at $0.001 par value with 2 million authorized shares. Ian in capital amounted to $ 10.249 billion as of 2018. Accumulated deficits amounted to $ 5.317 billion during the year. Accumulated deficits include negative retained earnings within the year. Total liabilities and shareholder equity accumulated to an amount equal to total assets, $ 29.739 Billion and $ 28.655 billion for 2018 and 207, respectively (“Tesla Inc,” n.d.).

The consolidated statement of operations is simply the income statement. The income statement is used by the management and other financial statement users to determine whether an organization is making profits. Total revenues and expenses are included in the income statement (“Financial Statements,” 2015). For Tesla Company, the consolidated operation statement entails three major aspects within three years; 2016, 2017, and 2018. Revenue was generated from automotive sales, automotive leasing, energy generation and storage, and other services. Total revenues generated within the year accumulated to $ 21.461268 billion, the highest within the three years. In 2017, revenue increased by 69.98%, indicating that the company was efficiently generating revenue from its services offered. Cost of revenues relates to revenue-generating services, including automotive sales and leasing. The costs increased gradually within the three years as revenue increased. This led to an increase in total gross profit during the years.

Operating expenses include expenditures incurred in the company. Expenses within the company include research and development, selling, general and administrative, restructuring, and other expenses. Total operating expenses accumulated to $ 4.430094 billion. These expenses increased by 14.93% from 2017 (“Tesla Inc,” n.d.). As of 2017 and 2016, there were no restructuring and other expenses that decreased expenses during the year. However, restricting and other expenses accumulated to $ 135,233,000 in the year 2018. Income tax within the three years was different, dependable to the loss amounted before income taxes. Income taxes for 2016 accumulated to $ 26,698,000 due to the low amount of loss recorded during the year. The net losses for the three years were $ 1,062,582,000 in 2018, $ 2.24 billion for 2017, and $ 0.773 billion for 2016 (“Tesla Inc,” n.d.).

In conclusion, financial statement analysis assists analysts in determining an organization’s stability and health. This provides a basis for understanding how an organization operates its business. Tesla Inc. is a large multinational company and operates its business on a large scale. Through financial statements provided and filed at the SEC 10-K report, the management can easily access these financial statements to show progress and how the company operates within the specified timeframe. The management can adopt various accounting methods to determine changes in visible health and reduce the losses incurred within the business. Hence, these financial statements can be used in detailed decision-making.

References

Basics of Financial Statement Analysis. (2019). Financial Statements.

Financial Statements. (2015). Analysis of Financial Statements, 37-61. Tesla Inc. (n.d.). SEC.gov. https://www.sec.gov/Archives/edgar/data/1318605/000156459019003165/tsla-10k_20181231.htm#Item_8