Essay on Tesla Motors Financial Analysis - 2341 Words

Tesla Motors, Inc. Financial Analysis Project Accounting II – Dr. Frazer Themistoklis Tambassopoulos Introduction 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†¦The current ratio directly relates the company’s current assets against its current liabilities. A good current ratio will be over 1. For example if the current ratio were 2.0 this would mean that the company’s current assets are twice as large as its current liabilities. For Tesla Motors the current ratio drops significantly over the years. It starts at 2.76 in 2010, then drops to 1.95 in 2011, and finally reaches 0.97 in 2012. As you can see the current ratio in 2012 is below one. The current ratio of 0.97 means that as of December 2012, Tesla Motors has more current liabilities than current assets. The working capital also has a direct relationship with the company’s current assets and current liabilities. The working capital should be positive in order to be considered good. To determine the working capital the current liabilities are subtracted from the current assets. As in the current ratio example the same pattern will show in the working capital. It will decline from 2010 to 2011 and then will become negative in 2012. This pattern shows a decline in Tesla Motors ability to use current resources to repay its debts. The ability for a company to pay currently maturing debts from periodic operations is determined by the cash flow from operations to current liabilities. To calculate this ratio youShow MoreRelatedFinancial Analysis Of Tesla Motors Inc.2040 Words   |  9 PagesFinancial Analysis of Tesla Motors Inc.- A Prediction of Future Growth Chengxing Zhao Texas AM University- Commerce Financial Analysis of Tesla Motors Inc.-A Prediction of Future Growth Abstract Tesla is one of the U.S. most notable new energy start-up companies in recent years. Its Model S is the on the U.S. best-selling luxury car list and is named America’s most secure vehicles. This paper is intent to conduct an analysis study on Tesla Motor based on available financial information and sourcesRead MoreCase Study of Tesla Motors Inc. 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