GBSB Global Business School

CO119 – Financial Strategies for Business Development (Online)

Professor Belkis M. Reyes-Fernandez

Spring 2022

Assignment 1

Study and analyze Tesla Inc. and find their published 2021 Balance Sheet Financial statement.

Aml Mohammed Miftah Albarghouti

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Introduction

Headquartered in Texas, United States, with manufacturing facilities in China and

Germany and operating across Asia, Europe and the Pacific, Tesla inc. is an automotive and

energy company that core business evolves mainly around manufacturing, selling and leasing

electronic vehicles and energy power systems with a market capitalization of more than US $900

billion. In 2020, the report indicates that the company has had the best world sales market of

23% battery electric items and 16% of the market share. (Google Finance, 2021).

Below will discuss the financial condition of the company using and analyzing the

consolidated balance sheet extracted from the Tesla 10 K annual report 2021, highlighting the

most important accounts (ones that create a variation) of the assets, liability and stakeholder’s

equity. This will also assess the same accounts by applying a vertical analysis comparing with

the previous year 2020 figures. Also, a basic analysis by applying the working capital ratio will

be conducted in comparison with another business of the same industry, i.e., Ford Motor

company.

In addition, a summary on how well or not well the performance of the company is, will

be given in conclusion of the analysis.

Balance sheet analysis (2021 vs.2020)

Assets

Increased ($62,131B) 19.14%

 Current assets:

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 According to the report (Appendix 1), cash and equivalent constituted a reasonable

variation of 28.2% of the total assets. During 2021, It declined slightly 9.32% from 2020

($17,576B) comparing to the previous year ($19,384B). The variation is very small;

however, this is reflected on the increase in inventory 40.38% or investments. (McDonald

2022).

 Non-current assets:

PP&E is the headliner account as Tesla inc. is a manufacturing company, so plant and

equipment are of a great value and it represents 30% of the total assets. The figure

increased 48.14% from 2020. According to Stringer 2021, Tesla is enhancing its

infrastructure to meet the new growth in the market in USA and Germany. Also planning

to invest in the Cybertrucks in the near future. This led to the uprising in the PP&E

during 2021.

Solar energy system declined to (5,765B) 3.57% while operating lease vehicle account

increased by 45.9%

Liabilities

Increased 30,548B - 7.49%

 Current liabilities:

The majority of 2021 debts are due in the short-term as account payable in 2021 rose

significantly by 65.6 % from the previous year. Looking back to the past five fiscal years,

Tesla’s accounts payable increased from $2.39B in 2017 to $10.025B in 2021 (Finbox

data). It is a similar case with Accrued liabilities account; accrued purchases, payroll &

related costs and other, they increased by 48.35 % from the previous year. Explained by

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 Jones 2017, Tesla perused an initiative of increasing liabilities to create a large amount of

the positive free cash flow.

 Non-current liabilities

Debt and lease obligations decreased to 23.47%. Tesla incurred less than (11,000B) in

2021, comparing with 2020 (14,170B). In total, 35% of the company’s debt is non-

current and is not due for payment during the next 12 months.

Stakeholder’s equity

Increased debt $31,015B- 34.40

 Additional paid-in capital

PIC increased by 9.32 % from 2020, According to the account note in the 10 k Tesla

report (page 69), Tesla has adopted ASU 2020-06 standard January 2021, resulting in

increasing the net debt balance and reducing the PP&E. In this context, increasing the

equity 10.7 % while reducing the additional PIC by ($474 M). (Appendix 2)

 Retained earnings

It is also known as accumulated deficit. The adoption of ASU has also affected the

accumulated deficits, in 2021, it flipped positive ($331M) while in 2020 was ($-5,399B).

In other words, this resulted in 106.13% decline from 2020. (Appendix 2)

Working capital analysis

A basic comparison with a Ford Motor inc. was applied in order to achieve more stronger

and professional view of the company working capital health. According to Vozza 2021, a

business with ratio between 1.2 and 2.0 is actually a healthy one and implies that the company

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has the financial capacity to stay short-term solvents. Tesla has shown a good liquidity

management, as when measuring the working capital; current ratio is current assets less current

liabilities equals 1.3 while being compared to Ford Motor (Appendix 3) and applying the same

equation, Ford inc. 1.2. Both have shown a good indicator in terms of liquidity management;

however, Tesla is better able to pay off its liabilities as compared to Ford.

Conclusion

In this paper, an analysis of the big blocks in the balance sheet of Tesla inc. and its

subsidiaries for 2021 have been conducted. Also, the numbers for the said period were compared

thoroughly with the ones of the previous year; i.e., 2020 within the same business, to give a

quantitively assessment to the condition of the company. Moreover, a basic comparison with a

similar business in the same industry was applied in order to achieve more stronger and

professional view of the company for the near future.

In my opinion Tesla is performing positively this year. Analysis shows that the company

is prepared to meet and fulfil operating labilities and obligations; i.e., to pay for a borrower's

interest expense through its most liquid assets.

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References

FinBox, F. B. (n.d.). Account payable for Tesla Inc. The Complete Toolbox for Investors.

Retrieved May 2, 2022, from https://finbox.com/NASDAQGS:TSLA/explorer/ap

Ford Motors, Aannual. report. (2021). Strategic Progress of Ford+ Growth Plan, Solid

Financials in ’21 Position Company for Connected EV Leadership in 2022, Beyond. Home

| Ford Media Center. Retrieved May 5, 2022, from https://media.ford.com/

GoogleFinance, G. F. (n.d.). Tesla Inc. GoogleFinance. Retrieved May 6, 2022, from

https://www.globaldata.com/company-profile/tesla-inc/#:~:text=Tesla%20Inc%20(Tesla)

%20is%20an,energy%20generation%20and%20storage%20systems.

Inc., Tesla (2021). Tesla Inc. ANNUAL REPORT For the fiscal year ended December 31, 2021.

10-K. Retrieved April 27, 2022, from

https://www.sec.gov/Archives/edgar/data/1318605/000095017022000796/tsla-

20211231.htm#item_8_financial_statememts_supplementar

Jones, C. (2016, October 31). Tesla pulled a lot of levers to generate positive cash flows. Forbes.

Retrieved May 3, 2022, from https://www.forbes.com/sites/chuckjones/2016/10/31/tesla-

pulled-a-lot-of-levers-to-generate-positive-cash-flows/?sh=73b5a21d3a6a

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McDonald, T. K. (2022, April 14). Tesla Stock: Capital Structure Analysis. Investopedia.

Retrieved May 5, 2022, from https://www.investopedia.com/articles/markets/052316/tesla-

stock-capital-structure-analysis-tsla.asp

Stringer, D. (2021, August 14). Tesla Stock: A look at their plant, Property & Equipment

(NASDAQ:TSLA). SeekingAlpha. Retrieved May 4, 2022, from

https://seekingalpha.com/article/4448651-tesla-a-look-at-their-plant-property-and-

equipment

Vozza, S. (2021). Working Capital: What it is & how to calculate it. Square. Retrieved May 6,

2022, from https://squareup.com/ca/en/townsquare/calculate-working-capital

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Appendix 1

Tesla, Inc.

Consolidated Balance Sheets

(in millions, except per share data)

    December 31,    December 31,  

    2021    2020  

Assets           

Current assets         

Cash and cash equivalents  $ 17,576     $ 19,384  

Short-term marketable securities    131       — 

Accounts receivable, net    1,913       1,886  

Inventory    5,757       4,101  

Prepaid expenses and other current assets    1,723       1,346  

Total current assets    27,100       26,717  

Operating lease vehicles, net    4,511       3,091  

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Solar energy systems, net    5,765       5,979  

Property, plant and equipment, net    18,884       12,747  

Operating lease right-of-use assets    2,016       1,558  

Digital assets, net    1,260       — 

Intangible assets, net    257       313  

Goodwill    200       207  

Other non-current assets    2,138       1,536  

Total assets  $ 62,131     $ 52,148  

Liabilities           

Current liabilities           

Accounts payable  $ 10,025     $ 6,051  

Accrued liabilities and other    5,719       3,855  

Deferred revenue    1,447       1,458  

Customer deposits    925       752  

Current portion of debt and finance leases    1,589       2,132  

Total current liabilities    19,705       14,248  

Debt and finance leases, net of current portion    5,245       9,556  

Deferred revenue, net of current portion    2,052       1,284  

Other long-term liabilities    3,546       3,330  

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 Total liabilities    30,548       28,418  

Commitments and contingencies (Note 15)           

Redeemable noncontrolling interests in subsidiaries    568       604  

Convertible senior notes (Note 11)    —      51  

Equity           

Stockholders' equity           

Preferred stock; $0.001 par value; 100 shares authorized;

    no shares issued and outstanding    —      — 

Common stock; $0.001 par value; 2,000 shares authorized;

    1,033 and 960 shares issued and outstanding as of

    December 31, 2021 and December 31, 2020, respectively    1      1 

Additional paid-in capital    29,803       27,260  

Accumulated other comprehensive income    54       363  

Retained earnings (accumulated deficit)    331       (5,399 )

Total stockholders' equity    30,189       22,225  

Noncontrolling interests in subsidiaries    826       850  

Total liabilities and equity  $ 62,131     $ 52,148  

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Appendix 2

Adjustments from

Balances at Adoption of ASU Balances at

Assets                

Property, plant and equipment, net   $ 12,747     $ (45 )   $ 12,702  

Liabilities                

Current portion of debt and finance leases     2,132       50       2,182  

Debt and finance leases, net of current portion     9,556       219       9,775  

Mezzanine equity                

Convertible senior notes     51       (51 )     — 

Equity                

Additional paid-in capital     27,260       (474 )     26,786  

Accumulated deficit     (5,399 )     211       (5,188 )

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 Appendix 3

FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(in millions)

December 31, December 31,

2020 2021

ASSETS

Cash and cash equivalents $ 25,243 $ 20,540

Marketable securities 24,718 29,053

Ford Credit finance receivables, net of allowance for credit losses of $394 and $282 42,401 32,543

Trade and other receivables, less allowances of $84 and $48 9,993 11,370

Inventories 10,808 12,065

Other assets 3,581 3,425

Total current assets 116,744 108,996

Ford Credit finance receivables, net of allowance for credit losses of $911 and $643 55,277 51,256

Net investment in operating leases 27,951 26,361

Net property 37,083 37,139

Equity in net assets of affiliated companies 4,901 4,545

Deferred income taxes 12,423 13,796

Other assets 12,882 14,942

Total assets $ 267,261 $ 257,035

LIABILITIES

Payables $ 22,204 $ 22,349

Other liabilities and deferred revenue 23,645 18,686

Debt payable within one year

Company excluding Ford Credit 1,374 3,175

Ford Credit 49,969 46,517

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 Total current liabilities 97,192 90,727

Other liabilities and deferred revenue 28,379 27,705

Long-term debt

Company excluding Ford Credit 22,633 17,200

Ford Credit 87,708 71,200

Deferred income taxes 538 1,581

Total liabilities 236,450 208,413

EQUITY

Common Stock, par value $0.01 per share (4,050 million shares issued of 6 billion authorized) 40 40

Class B Stock, par value $0.01 per share (71 million shares issued of 530 million authorized) 1 1

Capital in excess of par value of stock 22,290 22,611

Retained earnings 18,243 35,769

Accumulated other comprehensive income/(loss) (8,294) (8,339)

Treasury stock (1,590) (1,563)

Total equity attributable to Ford Motor Company 30,690 48,519

Equity attributable to noncontrolling interests 121 103

Total equity 30,811 48,622

Total liabilities and equity $ 267,261 $ 257,035

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