INCOME STATEMENT

Tesla’s sales have increased from year to year, and by a significant margin at that. In the past five years, net sales have increased by a total of 571%, with the previous year alone increasing by approximately 82.51%, showing that not only are their sales growing, but they are increasing at a higher rate every year (See Figure 1.1). Of course, as sales increase, the cost of sales tends to increase as well. However, what may be even more remarkable is that while sales continue to skyrocket, the cost of those sales remains under control and grow at a relatively proportional rate to net sales. This results in a steady increase in gross margin as well, reflecting Tesla’s discipline to spend only necessary amounts to produce income, and foreshadows the capacity to maintain stability.

 BALANCE SHEET

Tesla boasts a large amount of current assets, accounting for almost two-thirds (61%) of their total assets. While a significant amount for this portion is related to inventory, it is still reflective of the high amount of liquidity at Tesla’s disposal, along with the cash and receivables (which will be further discussed in the Cash Flows Analysis) that the company also has in store. Even more impressive however is the over 34% of Property, Plant, and Equipment that accounts for total assets (See Figure 2.1), and although certain line items that were introduced in recent years such as Goodwill and other intangibles also caused an increase in total assets, those pale in comparison to the effect that PPE had. This is so relevant because while it may sacrifice liquidity, this large amount in PPE is directly related to Tesla’s efforts to grow and expand to almost unnatural lengths. A majority of the amount in this line item correlates to the purchases of giant Gigafactories that Tesla has purchased across the United States, namely New York, California, and Nevada. Even more so, they have looked to expand internationally as well, with a plant already in China and rumors of new plants to be built in Germany. These Gigaplants provide a “one-size-fits-all” factory that, ideally, could produce all products that Tesla currently has to offer. These large expansive projects have been key to Tesla’s more recent success, and will most likely continue to be big contributors in the years to come.

In comparison to equity, total liabilities certainly make up the majority of the two combined (See Figure 2.2). Tesla has chosen to practically give away very little stock in its company and has only gone public as of the beginning of this decade. Instead, Tesla has seemed to focus on financing its expansion projects primarily through debt and has even acquired other companies such as SolarCity and Maxwell Technologies Inc. Current liabilities tend to make up anywhere between 25-35% of the total liabilities in recent years, with the bulk of that stemming from a mixture of accounts payable and short-debt. Ironically, long-term debt alone makes up for roughly the same amount (oftentimes even a little more) as total current liabilities, further driving the fact home at just how far Tesla has gone to expand their horizons. This debt had also followed the trend of increasing year to year, until recently showing a decline, which would indicate that either Tesla has begun to pay off these debts, Tesla has accrued less debt in recent years, or the more likely option, both. This makes sense, as Tesla has shown signs of maturity in recent years, resulting in a lower need for debt to finance.

STATEMENT OF CASH FLOWS

Through careful digging, one can find that this statement paints the exact same pictures as all the others, constant growth, and recent maturity. For instance, total operating expenses, despite negative amounts in all previous years, were positive by a significant margin in the most recent year. This was due to a combination of more depreciation due to the increase in fixed assets, losses adopted from previous acquisitions being phased out, and an increase in accounts payable. While the latter does suggest that Tesla may be having difficulty paying off vendors, the corresponding increase in accounts receivable professes that it is more likely a result of just total increased activity within the company overall, similar to the relationship between sales and COGS.

Not so coincidentally, this is supported even more when glancing at the total financing activities of the company, which show a similar pattern but reversed. It is a near mirror image of the operating activities, again seeming to oscillate randomly, while having a general pattern of increasing, before suddenly shooting down in the most recent year (See Figure 3.1). In contrast to the operating activities, this drastic difference in the most recent year derives from the paying off of debt, the decrease in the accumulation of debt, and the decrease in proceeds from public offerings and warrants, payments from issuing warrants, and the payment of “other borrowings”.