Tesla Motors is a California-based automobile manufacturer in Palo Alto, California. Tesla Motors was founded in 2003 by Elon Musk, Martin Eberhard, Marc Tarpenning, JB Straubel, and Ian Wright. Today, Tesla Motors is at the forefront of the electric vehicle movement. Tesla Motors currently has been dedicated to its three main electric vehicles: The Tesla Roadster, Tesla Model S, and the upcoming Tesla Model X.
The current financial health of the company is questionable based on the presented financial statements. Their strength comes exclusively form its stock offerings. The company has never declared or paid dividends and does not anticipate any payments in the near future, which make sense looking at the net losses from the previous years.
Revenue has been growing from 2010 to 2014 due to the increase on sales, but the cost of revenue remains really high as well. Operating expenses has been increasing, mainly due to the increase in sales, which has help to spread the amount of other expenses.
By the end of 2014 the current ratio of the company is 1.52 which indicates that Tesla has enough cash to cover short terms liabilities. The quick ratio shows the company has a high liquidity ratio for the industry.
On the opposite side, the receivable turnover ratio is alarmingly high affecting the company’s overall financial prospect.
The company has a negative profit margin, mainly due to the cost of goods sold. Because the higher cost, the company the company didn’t have enough to cover other expenses, resulting in a loss in net income.
Another key elements of Tesla financials are the gross margin and operating margins. he gross margin shows how efficiently an auto manufacturer runs its manufacturing process to deliver vehicles at prices that can achieve the highest possible profitability.
Tesla continues generating efficiencies from its production lines, as it ramps up the volume of cars it produces every year. With increasing economies of scale, Tesla’s gross profit stabilized at around 25% with its flagship Model S. As the company continues learning by doing and increasing its capacity, its fixed costs are likely to be spread over a larger volume of vehicles, possibly decreasing the sales costs of its cars in the future.
The company showed considerable improvement in its operating margin by 2014 due to increasing volumes of production, yet it remained persistently negative.
In conclusion, the financial information on Tesla indicates that the company has a promising future despite their current declining trend in net income. The company’s production of electric vehicles is an advantage as its future projections, and anticipated sales are more likely to be on the rise as more countries are currently implementing the sustainable energy programs to phase out the use of gasoline-based automobiles.