Tesla Motors Financial Analysis
Financial Analysis Project
Accounting II – Dr. Frazer
In this paper I intend to provide a sound financial analysis of Tesla Motors Incorporated. I will do so by calculating and providing liquidity, profitability, and solvency ratios and then evaluating those results. Assessment of these ratios will more or less define Tesla Motors’ abilities to meet its short-term debts and obligations (liquidity), performance in relation to sales, assets, and profits or losses (profitability), and the resulting income amount, after tax deductions, against the company’s liabilities (solvency). Additionally I will compare …show more content…
This would indicate that the company could easily cover its current liabilities with its operating cash flow. Tesla Motors however does not have a higher numerator. In fact its operating activities cash flow shows a negative value for all three years – though one thing to consider is that the value has become less negative as the year 2012 approached.
Both the inventory turnover rate and the days to sell the average inventory can tell investors how quickly inventory will sell on average. A high inventory turnover rate will indicate that a company is doing well in terms of selling its products and will not have excess inventory. The days to sell the average inventory will show, on average, how many days it will take to sell inventory after production. Tesla Motors fluctuates up and down within the years but eventually settles at an inventory turnover rate of 2.41 and 167.80 days to sell the average inventory. The inventory turnover rate of 2.41 may seem good but when compared to the industry average Tesla Motors is lacking.
Investors use profitability ratios to conclude how much return they can make on the company in question. These ratios show how well a company is doing based on how much profit they can produce. The profitability ratios will be a good reflection of a company’s overall performance in terms of efficiency and profits. The