Tesla Inc Financial Analysis - GestioPolis

Tesla Inc Financial Analysis

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Tesla, Inc. was founded in 2003 by American entrepreneurs Martin Eberhard and Marc Tar penning and was named after Serbian inventor Nikola Tesla. In 2008, Tesla Motors released its first car, the Roadster; tests showed that it is performance was comparable to that of many gasoline-powered sport cars. The Roadster produced no tailpipe emissions, as it did not use an internal combustion engine.

In late 2007, Eberhard resigned as CEO and joined the advisory board of the company, therefore Elon Musk took over as CEO and in 2010, and Tesla’s initial public offering raised some $226 million. In 2012, Tesla stopped the production of the Roadster to focus on its new Model S sedan, which was acclaimed for its performance and design. (Gregersen, 2018)

Return on Equity

The amount of net income returned as a percentage of shareholder’s equity for Tesla is -19.83%, it means that every dollar of common shareholder’s equity generates -19.83% of net income. In terms of the overall success of the company, it expresses that -19.83% of net income is earned for every dollar invested by the owners.

Earnings per share

Tesla’s average number of shares based on the number of shares at the beginning and end of the year is -3.04, this means that if Royal Dutch Shell distributed every dollar of income to its shareholders; each share would receive -3.04 dollars.

Gross Margin

The percentage of total sales revenue that Tesla retains after incurring the direct costs of associated with producing the goods and services it sells is expressed as 18.8%, this means that after Tesla pays off its inventory costs, it still has 18.8% of its sales revenue to cover its operating costs.

Receivable Turnover

The measure of how quickly Tesla collects its accounts receivable is expressed as the receivable turnover ratio, in the case of Tesla is 17.78; this means that on average; the company collected its receivables 20.24 times per year.

Inventory Turnover

Tesla’s number of times its inventory is sold and replace during the year is 6.48, Tesla sells and replaces its inventory about 55.56 times per year.

Price to Sales

The measure of how much investors are paying for Tesla in its most basic form is expressed as 2.37; this means that the value placed on each dollar of the company’s revenues is expressed as 2.37.

Revenue per Employee

The measure of how much money each employee generates for Tesla is expressed as $571,645.05. Tesla’s revenue per employee compared with Ford’s $1,725,000 indicates lower productivity.

Conclusion

In conclusion, the financial development if Tesla in 2018 was “unstable” due to the company is still consider young; therefore, the financial strength is not as high as Ford’s. In terms of the revenue per employee, Tesla has around 37,000 subordinates; in consequence, the amount of money that each employee generated in 2018 was around half a million dollars.

Even though Tesla is not going through a stable financial development, I would like to invest on Tesla and the reason is has to do more about the company is trying to change the world into a non-gasoline automobiles society. The decision is more about the feeling and the security Tesla is giving me. However, if we consider the financial ratios I would think about investing in Tesla because is still a young company.

Bibliography

  • Gregersen, E. (2018). Tesla, Inc. From Britannica: https://www.britannica.com/topic/Tesla-Motors
  • Tesla. (2019). From Tesla: https://www.tesla.com/about

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Ramirez Ramos Emilio Andres. (2019, mayo 2). Tesla Inc Financial Analysis. Recuperado de https://www.gestiopolis.com/tesla-inc-financial-analysis/
Ramirez Ramos, Emilio Andres. "Tesla Inc Financial Analysis". GestioPolis. 2 mayo 2019. Web. <https://www.gestiopolis.com/tesla-inc-financial-analysis/>.
Ramirez Ramos, Emilio Andres. "Tesla Inc Financial Analysis". GestioPolis. mayo 2, 2019. Consultado el 17 de Julio de 2019. https://www.gestiopolis.com/tesla-inc-financial-analysis/.
Ramirez Ramos, Emilio Andres. Tesla Inc Financial Analysis [en línea]. <https://www.gestiopolis.com/tesla-inc-financial-analysis/> [Citado el 17 de Julio de 2019].
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