Comparative Analysis: Choose two companies from the
same industry and compare their financial statements.
Analyze their revenue, expenses, profitability ratios,
liquidity ratios, and solvency ratios. Identify the strengths
and weaknesses of each company based on their financial
performance
Introduction
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
This report aims to conduct a comparative analysis of two companies from
the same industry by comparing their financial statements for the year 2019.
The two companies chosen for analysis are Tesla and Ford, both of which
operate in the automotive industry. In order to analyze and compare the
financial performance of these two companies, their income statements,
balance sheets as well as key profitability, liquidity and solvency ratios will
be examined. Based on the analysis of financial statements and ratios, the
strengths and weaknesses of each company will be identified.
Company Profiles
Tesla Inc.
Tesla is an American automaker, energy storage, and solar panel
manufacturer. The company is headquartered in Palo Alto, California and was
founded in 2003 by Martin Eberhard and Marc Tarpenning. Tesla designs,
manufactures and sells electric vehicles and battery energy storage
products. Some of its popular electric vehicle models include Model S, Model
X and Model 3. Tesla is led by its CEO Elon Musk and as of 2019, it employed
around 48,818 people.
Ford Motor Company
Ford is an American multinational automaker headquartered in Dearborn,
Michigan. It was founded in 1903 by Henry Ford and currently employs
around 188,000 people worldwide. Ford designs, manufactures, markets and
services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln
luxury vehicles. Some of Ford's popular vehicle models include F-Series,
Explorer, Escape, Mustang and Ranger. As of 2019, Ford is led by its
President and CEO Jim Hackett.
Comparative Analysis of Income Statements
Let us first analyze and compare the income statements of Tesla and Ford for
the year ending 2019:
Revenue
Tesla's total revenue for 2019 was $24.58 billion, which represented a 50%
increase from $16.40 billion in 2018. The increase in Tesla's revenue was
primarily driven by higher automotive sales volumes as deliveries of Model 3
grew significantly during the year.
In comparison, Ford reported total revenue of $156.77 billion for 2019, which
was 1% lower than $158.34 billion in 2018. Ford's revenue declined
marginally due to lower volumes in North America and Europe.
Cost of Goods Sold & Expenses
Tesla's cost of goods sold in 2019 was $20.93 billion, an increase of 54.5%
from $13.56 billion in 2018. As a percentage of revenue, Tesla’s cost of goods
sold rose slightly to 85.2% in 2019 from 82.6% in 2018.
Ford's cost of goods sold for 2019 was $136.34 billion compared to $136.27
billion in 2018. As a percentage of revenue, Ford’s cost of goods sold fell to
86.9% in 2019 from 86% in 2018.
Tesla's operating expenses including selling, general and administrative
expenses rose to $3.27 billion in 2019 from $2.18 billion in 2018.
Ford's operating expenses increased to $20.43 billion in 2019 from $19.36
billion in 2018, rising as a percentage of revenue to 13% from 12.2%.
Operating Income/Loss
Due to higher costs, Tesla reported an operating loss of $859 million in 2019
as against a loss of $1.03 billion in 2018.
On the other hand, Ford reported an operating income of $6.98 billion for
2019 compared to $7.70 billion in 2018, reflecting a 9.4% decline. The
operating margin also fell to 4.4% from 4.9% over the same period.
Net Income/Loss
Tesla’s net loss for 2019 narrowed down to $862 million from a loss of $1.01
billion in 2018.
Meanwhile, Ford reported a net income of $47 million for 2019 compared to
$3.68 billion in 2018, representing a decrease of 98.7%. The net margin
declined sharply to 0.03% from 2.3% over the previous year.
Analysis
Based on the analysis of income statements, the following key observations
can be made about the relative financial performance of Tesla and Ford:
- Tesla's revenue increased substantially by 50% in 2019 primarily due to
higher deliveries, however it reported operating and net losses for the year.
- Ford's revenue declined marginally by 1% in 2019 driven by lower volumes,
and it reported a sharp decline in net income.
- Tesla's cost of goods sold grew faster than revenue, resulting in lower
margins. Ford was able to modestly control costs and maintain better
margins than Tesla.
- Ford is currently more profitable than Tesla, however its profitability
declined in 2019 compared to previous year.
- Tesla is still in an investment phase as it scales up production and incurs
higher costs, however losses are reducing compared to previous years.
Comparative Analysis of Balance Sheets
Let us now analyze and compare the balance sheets of Tesla and Ford as of
December 31, 2019:
Assets
Tesla's total assets as of 2019-end were $30.48 billion, significantly higher
than $20.81 billion in 2018.
Ford's total assets amounted to $197.03 billion in 2019 compared to $199.64
billion in 2018.
Cash & Equivalents
Tesla's cash and cash equivalents jumped significantly to $6.27 billion in
2019 from $3.68 billion in 2018, driven by capital raises during the year.
Ford's cash and cash equivalents also increased to $37.34 billion as of 2019
from $36.33 billion in the previous year.
Inventories
Tesla's inventories grew to $4.05 billion in 2019 from $2.76 billion in 2018, in
line with higher production.
Similarly, Ford's inventories rose to $18.24 billion from $17.57 billion over
the same period.
Property, Plant and Equipment (Net)
Tesla's net property, plant and equipment increased to $9.78 billion in 2019
from $8.02 billion in 2018 as it expanded manufacturing facilities.
Ford's net property, plant and equipment decreased marginally to $62.93
billion in 2019 from $63.41 billion in 2018.
Total Liabilities
Tesla’s total liabilities increased to $16.54 billion in 2019 from $11.83 billion
in 2018.
Ford's total liabilities rose to $199.58 billion as of 2019 from $193.35 billion
in 2018.
Analysis
The key observations from balance sheet analysis are:
- Tesla's assets and liabilities grew significantly in 2019 driven by capital
raises and investments in production capacity expansion.
- Ford's balance sheet size remained relatively stable with a marginal decline
in total assets between 2018 and 2019.
- Both companies maintained healthy cash reserves despite capital
investments during the year.
- Tesla's long term debt increased to fund growth projects, while Ford
retained lower debt levels on its balance sheet.
- Tesla's growth phase is visible from investments in property, plant &
equipment and resulting rise in fixed assets base.
Comparative Analysis of Key Financial Ratios
Let us now analyze and compare some key profitability, liquidity and
solvency ratios of Tesla and Ford based on their 2019 financial statements:
Profitability Ratios
Gross Profit Margin:
Tesla: 14.8%
Ford: 13.1%
Operating Profit Margin:
Tesla: -3.5%
Ford: 4.4%
Net Profit Margin:
Tesla: -3.5%
Ford: 0.03%
Return on Assets:
Tesla: -2.8%
Ford: 0.02%
Return on Equity:
Tesla: -3.6%
Ford: 0.1%
Analysis: Ford has consistently higher profit margins and returns compared
to Tesla indicating better cost controls and profitability. However, Tesla is still
early in its investment phase.
Liquidity Ratios
Current Ratio:
Tesla: 1.12
Ford: 0.96
Quick Ratio:
Tesla: 0.78
Ford: 0.42
Cash Ratio:
Tesla: 0.39
Ford: 0.24
Analysis: Both companies maintain healthy current ratios. Tesla's liquidity
position is stronger with higher current and quick ratios.
Solvency Ratios
Debt to Equity Ratio:
Tesla: 1.08
Ford: 1.31
Debt to Assets Ratio:
Tesla: 0.54
Ford: 1
Times Interest Earned:
Tesla: -15.17
Ford: 51.3
Analysis: Tesla has lower debt levels indicating better solvency. However, it
has negative interest coverage due to losses, while Ford maintains
comfortable coverage.
Comparative Analysis of Strengths and Weaknesses
Based on the comparative analysis of financial statements and ratios, the
key strengths and weaknesses of Tesla and Ford can be summarized as
follows:
Tesla Strengths:
- Growing rapidly with expanding revenue base
- Strong R&D Focus on new technologies & products
- Healthy liquidity position and manageable debt levels
- Loyal customer base and first mover advantage in EVs
Tesla Weaknesses:
- Continued operating and net losses despite scale up
- Higher costs and lower profit margins than competitors
- Highly dependent on consumer subsidies and regulations
- Production ramp up challenges and quality issues initially
Ford Strengths:
- Established brand name and global production footprint
- Scale advantages with strong profit margins and returns
- Diversified revenue streams across vehicle segments
- Conservative balance sheet with low debt levels
Ford Weaknesses:
- Legacy ICE focus with delayed push into electrification
- Declining market share in U.S. and China key markets
- Higher restructuring costs in transition to EVs and autonomy
- Exposure to trade wars and cyclical automotive demand
Conclusion
In conclusion, the comparative analysis of Tesla and Ford reveals that despite
its early investment phase, Tesla is making rapid strides in the electric
vehicle segment leveraging technological leadership. However, it continues
to report losses due to higher costs and lower margins compared to the well
established Ford. Ford demonstrates stronger financial fundamentals with
consistent profits and returns, but faces challenges in transitioning to electric
and autonomous vehicles. Overall, Tesla shows promise for future growth
while Ford will need to spearhead innovations to retain competitive edge in
the evolving automotive industry. Regular monitoring and benchmarking of
the financial performance of these companies is recommended to gain
further insights.
