Tesla Inc. Financial Analysis

Tesla Motors Inc.

Tesla Motors Inc. is an American company that began operations in 2003 with a pioneering team of engineers in Silicon Valley, California (Burns, 2014). The company invents, manufactures and sells electric vehicles. There are also more innovative electronic car performance training devices for other automakers such as Daimler and Toyota. Palo Alto, California is the headquarters of Tesla, which has subsidiaries in North America, Europe and Asia. Tesla employs about 2,000 people and has over 31 underground parking garages and service points (Burns, 2014). Tesla Motors Inc. is a stylist, inventor, manufacturer and supplier of electric vehicles and electric trains. Another business that Tesla carries out is giving services to other motor vehicles in the automobile industry. Its main competitors are Ford Motor Company and General Motors (GM).

Comparing Account Balances in the Statements from One Period to the Next

Balance Sheet

Tesla statement of financial position had total assets worth 5.85B, 8.07B, and 22.66B for the fiscal year 2014, 2015, and 2016 respectively (Marketwatch, 2017). This value represents 37.95% increase in total assets from 2014 to 2015. In the financial year 2016, there was an increase of 180.79% up from 2015 in total assets. The company had total liabilities amounting to 4.88B, 6.98B, and 16.76B in the financial year 2014, 2015, and 2016 respectively (Marketwatch, 2017). These figures represent an increase of 43.03% and 140.11% in liabilities from 2014 to 2016.Tesla had a total equity of 911.71M in 2014, 1.08B in 2015, and 5.91B in 2016(Marketwatch, 2017).

Income Statement

The income statement for the company indicates revenues amounting to 3.2B, 4.05B, and 7B for the financial year 2014, 2015, and 2016(Marketwatch, 2017). This measure represents 26.56% and 72.84% increase in sales from 2014 to 2016. Apparently, the company sales increased over the three financial years. The gross profit for the company was 881.67M, 933M, and and1.57Brespectively. This increase shows that the company incurred many costs in selling the goods, which contributed to less gross profit over the years. The interest expenses increased over the years and amounted to 100.89M, 118.85M, and 198.81M in 2014, 2015, and 2016 respectively(Marketwatch, 2017). However, Tesla made losses over the years because its net income was (294.04M), (888.66M), and (674.91M).

Statement of Cash Flow

The cash flow of a company comprises of three core elements namely operating activities, financing, and investing activities. Tesla Inc. had net operating cash flow of 57.34M, 524.5M, and 123.83M for the financial year 2014, 2015, and 2016 respectively (Marketwatch, 2017). The operations of the company increased over the three years. The cash flow from investing activities increased across the three years 990.44M, 1.67B, and 1.21B respectively (Marketwatch, 2017). The cash flow from financing activities in 2014 was 2.14B, but later decreased to 1.52B in 2015 and increased to 3.54B in 2016 (Marketwatch, 2017).

Conclusion

The analysis of Tesla financial statements shows a significant fluctuation in assets, liabilities, revenues, and cash flows in the fiscal year 2014, 2015, and 2016.Logically, it is difficult to explain the changes in figures in the Tesla financial statements. Thus, it becomes a concrete reason to justify that fraud took place in the company in the aforementioned financial years.

References

Burns, M (2014). A Brief History of Tesla: TechCrunch Burns, M. Automotive World.

Marketwatch (2017).Annual financials for Tesla Inc.Marketwatch.com.Retrieved from https://www.marketwatch.com/investing/stock/tsla/financials/cash-flow