Here is the 10-K for Tesla. Some risks that are mentioned include,
ability to grow global product sales, strong competition, maintaining
public credibility and confidence in long-term business prospects, no
guarantee they will have sufficient cash flow to pay substantial
indebtedness, additional funds may not be available to them when
needed, exposure to fluctuations in currency exchange rates, etc.
An understatement of accounts payable can make it appear that you
have more resources available to pay creditors than you do.
Understanding the most common ways that accounts payable
becomes understated can help you be vigilant and ensure that your
records are as accurate as they can be. Accounts payable on a
company's balance sheet represents amounts owed to other parties
for invoices received. Overstating accounts receivable has no effect
on a company’s cash flow, another major element in financial
reporting. Companies report their accounts receivable in the balance
sheet based on accounting sales records. Companies might engage in
credit sales to allow customers to buy on accounts and record
revenue in the form of accounts receivable. Without proper
evaluation of customers’ reliability, companies could overstate
accounts receivable. Overstated accounts receivable affect not only
the balance sheet but also reported income and equity. Overstate
sales or understate expenses, company pay more income tax than
necessary. In some cases, financial misstatements are due to errors or
incomplete information. However, when executives deliberately
manage earnings to meet a desired goal, their actions may be
considered unethical or even fraudulent. The overstated net income
will inflate retained earnings and owner’s equity, because we add net
income to retained earnings at the end of the period. Detection of
financial misstatements can be done several ways. Look for revenues
that are overstated because of one-time events that are included in
normal income, such as the sale of a real estate parcel. Be wary of a
sudden increase in non-current assets and a drop in expenses
because it might indicate incorrect capitalization of expenses.
Another way to detect hidden expenses is a sudden rise in prepaid
expenses, which are current assets. For example, a company should
not treat insurance expenses due in the current period as prepaid
expenses.
