Information system assignment
zxy0120
part_3_financial_analysis_project.docx
1
Horizontal Analysis
A. Balance Sheet
Looking at Tesla’s balance sheet since 2013 to 2015, we can recognize that Tesla has been growing rapidly. First, Tesla’s assets have grown 142.01% from 2013 to 2014. Tesla’s electric vehicles has been receiving a lot more attention, and therefore, had much larger sales compared to 2013. Comparing the same time period, total liabilities rose as much as total assets did. Total liabilities rose 178.85% from 2013 to 2014, which mostly came from electric vehicle production. When we compare the balance sheet of 2014 to 2015, it is much different from the comparison of the balance sheet of 2013 to 2014. Comparing balance sheet of 2014 to 2015, increase in total assets was 38.35% and increase in liabilities was 42.67%. Although the changes in percentage of 2014 vs 2015 is much smaller than those of 2013 vs 2014, Tesla has still grown very large. When looking at the true value, during 2013 the total liability was $1749.81 and during 2015 the total liability was $6961.47. We can see that the liability is continuously rising due to its continuous growth; as sales are increasing, which we can see through total assets, liabilities are continuously increasing so that Tesla can provide more convenience and high leveled technology to its consumers. Tesla is progressively adding new supercharger stations in the states and developing new ways that they can provide environmentally friendly vehicles to a larger consumer group.
When we compare the balance sheet to Tesla’s competitor, General Motors, in terms of percentages, Tesla wins big time. Tesla’s assets, liabilities, and stockholder’s equity has been increasing more tremendously than those of General Motors. However, the main reason is that Tesla is still considered a fairly new company compared to General Motors. Tesla’s first electric vehicle, Model S, started deliveries during June 22, 2012, while General Motors have been making larger number of sales and reputation since 1908. When we compare the true value of Tesla’s 2013 total assets, which is $2416.93, and General Motors’ 2013 total assets, which is $166,344, we can see that General Motors’ assets are about 66 times larger than Tesla’s assets. However, in terms of percentages, Tesla’s assets increased 142.01% while General Motors’ assets increased 6.81%. The percentage tells us either that Tesla has grown much more vastly than General Motors did during 2013-2014 or that General Motors have already reached their top and cannot expand a lot further than this point.
Despite its small values, Tesla seems more likely to expand much more in the future than General Motors. Not only because there is a lot development that can be made through its new company, but also because the company is unique and innovative itself. All electric vehicles were not as popular when Model S came out because of its extremely high price. However, people were very interested in Tesla because their technology was entirely environmental friendly and their vehicles had a unique design. Through the public’s attention to the Tesla brand, Tesla was able to create their Model 3 which has a price more approachable to a larger consumer group, and therefore, have a larger likelihood of expanding their assets and profit in the future.
Horizontal Analysis
B. Income Statement
Tesla has been worsening over time. Throughout the past three years, Tesla has been seen acquiring gradually depreciating net incomes despite the increasing revenues. Its net incomes were -$74.01, -$294.04, and -$888.66 in 2013, 2014, and 2015 respectively. With this said, Tesla’s profitability has been declining as its net incomes has seen an average change of -249.76%. It is an apparent trend that expenses have been significantly outweighing gross profit, resulting in a negative gross income. Moreover, expenses have also been growing significantly from 2013 to 2015. Expenses in 2013, 2014, and 2015 were $1,775.05, $3,991.50, and $7383.96 respectively. This accounts for an average increase of 104.94% in expenses throughout the three year period. The year 2014, seems to have been Tesla’s worst year as all expenses have seen over a 100% change. Selling, general and administrative expenses for those two years saw itself displaying a 106.43% increase. Advertising saw a 443.33% increase from $9.00 to $48.90. Depreciation and amortization saw a 118.63% change. Rent and other expenses accounted for a 115.35% and a 131.60% change. Tax expenses, in particular, changed dramatically with a 743.23% increase, from $12.73 to $107.35. Compared to the company’s competitor, GM Motors, Tesla has not been as profitable. GM Motors found itself with net incomes of $5,346, $3,949, and $9,687 in 2013, 2014, and 2015, respectively. This represents the average increase of 59.59% in profit. GM Motors, however, does seem to have stagnant or even declining revenues over the past three years. With only a 0.32% change in revenues between 2013 and 2014 and a decline of -2.29% in revenues between 2014 and 2015, it does not seem like GM can find itself making significant increase in sales.
· Tesla has not reported any discontinued operations on their income statements for the past three years.
· Tesla has not reported any extraordinary items on their income statements for the past three years
Horizontal Analysis
C. Cash Flow Statement
Tesla’s cash flow overall is not improving or worsening. As stated previously on the income statement comments, Tesla is still a novel vehicle company. Therefore, we can’t determine Tesla’s status in terms of cash flow by looking at the three year period data. From 2013 to 2015, Tesla’s operating cash flow has decreased from 257.94 to -524.499. Looking at the negative value of operating cash flow, we may assume that Tesla might not be able to maintain and grow its operations. However, when we take into account that Tesla is still one of the more novel vehicle companies, we can understand that large sums of cash flow in investment is necessary and as a result lowering the operating cash flow. All of the net income values were negative, so it is nearly impossible to maintain a positive operating cash flow. The negative values of the operating cash flow doesn’t seem to be a huge conflict because it is natural when bringing a new product to a market.
Unlike Tesla’s operating and investing cash flows, its financing cash flow has been increasing. From 2013 to 2014, its financing cash flow increased 237.28%. However, in 2015 it decreased 28.91%, but it remained higher than that of 2013. Because of Tesla’s different trends in cash flow, it is hard to answer whether the company is improving or worsening over time. When we compare the cash flow data to that of General Motors, we can easily decide whether the company is improving or worsening. From 2013 to 2014, the operating cash flow decreased 20.36%. Therefore, General Motors spend on investment expenditure as much. From 2013 to 2014, its investing cash flow only increased 9.3%. After General Motors was able to increase its operational cash flow by 19.09%, it rapidly increased its investing cash flow by 78.59%. General Motors is more likely to have a stronger strategic plan in terms of cash flow because they have more and stronger data from their previous cash flow records. Hence, general Motors is able to maintain its steady increase in financing cash flow.
1. The discrepancy when comparing the net income of 2013, 2014, and 2015 to the operating cash flows of the same years seems to grow smaller. In 2013, the net income was $74,014 while the operating cash flows was $264,804. In 2014, the net income was -$294,040, and the operating cash flows for that year was -$57,337. In 2015, the net income was -$888,663 with an operating cash flows of -$524,499 that same year. This shows how discrepancy between Tesla’s net income and operating cash flows has been growing smaller for the past three years.
2. Tesla’s three largest adjustments in 2015 that affect net income are other funds, funds from operations, and changes in working capital. Other funds contributed a positive cash flow of $434,860. Funds from operations contributed a negative cash flow of $31,210. Changes in capital impacted the net income negatively with a cash flow of $493,290.
3. Tesla has not made any new investments in 2015. Only business acquisitions and other uses, a decrease in other restricted cash, has made an impact in capital expenditures for Tesla that year.
4. Tesla has never paid out any dividends, according to their cash flow statements.
5. Tesla has bought back its own shares in 2011. It repurchased 15 shares, and its total dollar value of repurchase for these shares were $416.00.
Tesla
2013
2014
2015
2013 vs 2014
2014 vs 2015
Average
Current Assets
$1,265.94
$3,198.66
$2,791.57
152.67%
-12.73%
69.97%
Noncurrent Assets
$1,150.99
$2,650.59
$5,300.89
130.29%
99.99%
115.14%
Total Assets
$2,416.93
$5,849.25
$8,092.46
142.01%
38.35%
90.18%
Current Liabilities
$675.16
$2,107.17
$2,816.27
212.10%
33.65%
122.88%
Noncurrent Liabilities
$1,074.65
$2,772.18
$4,145.20
157.96%
49.53%
103.74%
Total Liabilities
$1,749.81
$4,879.35
$6,961.47
178.85%
42.67%
110.76%
Total Stockholder's Equity
$667.12
$969.91
$1,130.99
45.39%
16.61%
31.00%
General Motors
2013
2014
2015
2013 vs 2014
2014 vs 2015
Average
Current Assets
$81,501.00
$83,670.00
$78,007.00
2.66%
-6.77%
-2.05%
Noncurrent Assets
$84,843.00
$94,007.00
$116,513.00
10.80%
23.94%
17.37%
Total Assets
$166,344.00
$177,677.00
$194,520.00
6.81%
9.48%
8.15%
Current Liabilities
$62,412.00
$65,701.00
$71,466.00
5.27%
8.77%
7.02%
Noncurrent Liabilities
$60,758.00
$75,952.00
$82,731.00
25.01%
8.93%
16.97%
Total Liabilities
$123,170.00
$141,653.00
$154,197.00
15.01%
8.86%
11.93%
Total Stockholder's Equity
$42,607.00
$35,457.00
$39,871.00
-16.78%
12.45%
-2.17%
Tesla
2013
2014
2015
2013 vs 2014
2014 vs 2015
Average
Net Sales/ Sales Revenue
$2,013.50
$3,198.36
$4,046.03
58.85%
26.50%
42.68%
COGS
$1,451.15
$2,084.75
$2,699.93
43.66%
29.51%
36.58%
Gross Profit
$562.35
$1,113.60
$1,346.09
98.03%
20.88%
59.46%
Selling, General & Administrative
$517.55
$1,068.36
$1,640.13
106.43%
53.52%
79.98%
Advertising
$9.00
$48.90
$58.30
443.33%
19.22%
231.28%
Depreciation & Amortization
$106.08
$231.93
$422.59
118.63%
82.21%
100.42%
Rent Expense
$21.50
$46.30
$68.20
115.35%
47.30%
81.33%
Other Expenses
1120.919
2596.011
5194.737
131.60%
100.10%
115.85%
Total Expenses
1775.047
3991.502
7383.959
124,87%
85.00%
104.94%
Operating Income / Earnings before
($61.28)
($186.69)
($716.63)
-204.63%
-283.86%
-244.25%
Tax Expense
$12.73
$107.35
$172.03
743.23%
60.25%
401.74%
Net Income
($74.01)
($294.04)
($888.66)
-297.28%
-202.23%
-249.76%
General Motors
2013
2014
2015
2013 vs 2014
2014 vs 2015
Average
Net Sales/ Sales Revenue
155427
155929
152356
0.32%
-2.29%
-0.99%
COGS
130909
131657
123800
0.57%
-5.97%
-2.70%
Gross Profit
24518
24272
28556
-1.00%
17.65%
8.33%
Selling, General & Administrative
11910
11756
11530
-1.29%
-1.92%
-1.61%
Advertising
5500
5200
5100
-5.45%
-1.92%
-3.69%
Depreciation & Amortization
5908
6238
7219
5.59%
15.73%
10.66%
Rent Expense
477
444
357
-6.92%
-19.59%
-13.26%
Other Expenses
29250
34803
51401
18.98%
47.69%
33.34%
Total Expenses
53,045
58,441
75,607
10.17%
29.37%
19.77%
Operating Income / Earnings before
6700
6278
9807
-6.30%
56.21%
24.96%
Tax Expense
1354
2329
120
72.00%
-94.85%
-11.43%
Net Income
5346
3949
9687
-26.13%
145.30%
59.59%
Tesla
2013
2014
2015
2013 vs 2014
2014 vs 2015
Average
Operating Cash Flows
257.94
-57.337
-524.499
-122.23%
814.77%
346.27%
Investing Cash Flows
-249.217
-990.444
-1673.551
297.42%
68.97%
183.20%
Financing Cash Flows
635.422
2143.13
1523.523
237.28%
-28.91%
104.18%
General Motors
2013
2014
2015
2013 vs 2014
2014 vs 2015
Average
Operating Cash Flows
12630
10058
11978
-20.36%
19.09%
-0.64%
Investing Cash Flows
-14362
-15698
-28035
9.30%
78.59%
43.95%
Financing Cash Flows
3731
5675
13686
52.10%
141.16%
96.63%
