Solution
Nitish Lath answered on
Mar 26 2021
TESLA INC ANALYSIS
TESLA INC ANALYSIS 11
TESLA INC ANALYSIS
STUDENT NAME……
STUDENT NUMBER………….
SECTION ONE
1. The main products and services of the entity:
The entity is engaged in the designing, manufacturing and selling the high performance fully electric vehicles and the energy generation and the storage systems and also engaged in offering services in relation to the products. The segment of the entity consists of automotive, and energy generation and storage. The automotive segment of the entity consists of designing, developing, manufacturing and selling and leasing of the electric vehicle and sale of automotive regulatory credits. In addition to this the energy generation and storage segment of the entity including the designing, manufacturing and installing the energy storage products and services in relation to the products and sales of the solar energy system incentives.
2. Chairman and Chief Executive Officer of the entity and their statement
The CEO of the organization is Elon Musk and the chairwoman is Robyn Denholm. The CEO and Chairwoman has discussed the 2019 actual results and performance of the organization and 2020 challenges and outlook. The KMPs have discussed that the company has achieved tremendous sales growth in year 2019 and the company has expanded its operations in various areas. Further the company is planning to extend its production capacities in three continents and the company is expected to increase its annual production capacity by 500000 units. Further the CEO has stated that the company is targeting its growth strategy in such a way so that it can achieve the CSR objectives as well as can achieve its long- term sustainability. Further the management has also discussed the sector growth, company strategies and visions etc. in his report.
3. Analysis of the dividend
The entity is having the policy of never declaring or paying the dividend on the common stock of the entity. Further the entity is not anticipating the payment of any cash dividend in the coming years. Thus, the entity has not paid any dividend to its shareholders (Tesla Inc. Annual Report 2019).
4. Analysis of the independent auditor of the entity
The independent auditor of the entity is Price water house Coopers LLP and they are serving as the auditor of the entity since 2005. Further in giving the opinion the auditor has audited the financial statement of the entity and according to the opinion of the entity the consolidated financial statement of the entity is presented fairly in all material aspect and the financial statement of the entity are prepared as per the generally accepted accounting principles.
5. Discussion on the outstanding common stock
The outstanding common stock of the entity in the year 2019 is 181 and in the year 2018 the outstanding number of shares are 173 shares. The entity is having 100 shares authorized but there are no shares which are issued and outstanding (Tesla Inc. Annual Report 2019).
SECTION TWO
The financial statement of the entity specifies the value of the assets, liabilities and stockholder equity and net income of the entity. These numbers help in analyzing the business condition of the entity and also help in the comparison with the previous year. This reveals whether the condition and performance has improved or declined as compared to the previous year. The assets, liabilities and stockholder equity and net income of the entity are discussed as below:
Particulars
2019 ($ in millions)
2018 ($ in millions)
Value of assets
34,309
29740
Value of liabilities
26,199
23427
Value of stockholder equity
6,618
4923
Net income
(775)
(1063)
The above analysis shows the financial position and performance of the entity has improved in the cu
ent year as compared to the previous year. The value of the asset in the cu
ent year has increased as compared to the previous year which is good sign that the asset base of the entity has improved in the cu
ent year which is an added advantage to the entity. In addition to this the value of the liabilities has also increased in the cu
ent year but this increase in the liabilities is co
espondingly less as compared to the increase in the assets of the entity. Moreover there is wide increase in the value of the stockholder equity of the entity which is again a good sign for the entity that the equity base for the entity has increased. In other words the increase in the owners’ equity of the entity made the entity stable and financially strong as the investment has increased in the cu
ent year. In addition to this the net income of the entity also reveals that the financially condition and performance of the entity has improved in the cu
ent year from the previous year. In the previous year the entity has incu
ed loss of $1063 million whereas in the cu
ent year the net loss for the entity is $775 million which is good sign for the growth and profitability of the entity. In the previous year the entity is suffering from the huge loss but in the cu
ent year the entity has managed to lower down the amount of loss of the entity from the business operations of the entity. Hence it can be concluded that the cu
ent year of the entity from the financial perspective is considered as a good year for the entity as there is lot of improvement in the business function and operations of the entity. The detailed analysis of the entity can be performed by considering the horizontal and vertical analysis of the financial statement of the entity.
i. Horizontal Analysis- TESLA INC.
The horizontal analysis shows the percentage change in the cu
ent year from the previous year or it shows the trend in the different line item of the balance sheet and income statement. It helps in analyzing the movement i.e. upward or downward movement in any particular item of the entity.
Income Statement
Tesla, Inc. Consolidated income statement
Base Year
2019
2018
2017
2019
2018
Revenues
Automotive sales
19,952
17,632
8,535
133.77%
106.58%
Automotive leasing
869
883
1,107
-21.50%
-20.23%
Total automotive revenues
20,821
18,515
9,642
115.94%
92.02%
Energy generation and storage
1,531
1,555
1,116
37.19%
39.34%
Services and othe
2,226
1,391
1,001
122.38%
38.96%
Total revenues
24,578
21,461
11,759
109.01%
82.51%
Cost of revenues
Automotive sales
15,939
13,686
6,725
137.01%
103.51%
Automotive leasing
459
488
708
-35.17%
-31.07%
Total automotive cost of revenues
16,398
14,174
7,433
120.61%
90.69%
Energy generation and storage
1,341
1,365
874
53.43%
56.18%
Services and othe
2,770
1,880
1,229
125.39%
52.97%
Total cost of revenues
20,509
17,419
9,536
115.07%
82.67%
Gross profit
4,069
4,042
2,223
83.04%
81.83%
Operating expenses
Research and development
1,343
1,460
1,378
-2.54%
5.95%
Selling, general and administrative
2,646
2,835
2,477
6.82%
14.45%
Restructuring and othe
149
135
—
Total operating expenses
4,138
4,430
3,855
7.34%
14.92%
Loss from operations
-69
-388
-1,632
-95.77%
-76.23%
Interest income
44
24
19
131.58%
26.32%
Interest expense
-685
-663
-471
45.44%
40.76%
Other income (expense), net
45
22
-125
-136.00%
-117.60%
Loss before income taxes
-665
-1,005
-2,209
-69.90%
-54.50%
Provision for income taxes
110
58
32
243.75%
81.25%
Net loss
-775
-1,063
-2,241
-65.42%
-52.57%
The revenue from the revenue from automobiles is decreased by 115% in the cu
ent year and it has increased by 92% in the previous year. Further the revenue from services and other revenue is also showing the increase in both the years. This is good sign for the entity as the revenue of the entity is showing increase on year to year basis. Further the cost of revenue is also showing sharp increase in both the years. The cost of revenue from automobiles is also increased in both the years and the cost of services and other revenue has also increased on year to year basis.
The total expenses of the entity has decreased by 7.34% in the cu
ent year and increased by 14.92% in the previous year. The profit before tax is also showing fluctuation over the period of two years. In year 2019, there is decline in the net loss of the entity as compared to the previous year. The net loss of the entity is showing decrease in the year-to-year basis which is showing that the entity is improving its profitability condition.
Balance...