Tesla is one of the largest companies in the United States of America and worldwide. It is famous for the production of electric cars, which basically utilize electric power in the form of charged batteries as a source of energy. Over the years, Tesla has increased its production and supply worldwide, hence having significant growth in its value. This research paper analyzes Tesla’s financial performance in the years 2019, 2020, and 2021, its balance sheets, income statements, and financial ratios to show its performance in the three years.
With the growth in production and supply in the last three years, Tesla’s financial statements and cash flows are expected to have noticeable changes. Its total assets as of 2019 were at $34,309 billion, which was a 15% growth from the previous year, where they were at $29,740 billion (Helmold et al., 2022). The company’s assets at the end of the year in 2020 were $52,148 billion (Helmold et al., 2022). This was a 52% growth of the company’s net worth, and compared to the 15% growth in the previous year, this was one of the most significant growth margins that the company has had in a single financial year. The figures grew to $62,131 billion in 2021, a 19.14% significant growth from the previous year (Helmold et al., 2022). The percentage growth was not very large from 2020 to 2021 compared to the increase between the years 2019 to 2020.
Liabilities refer to anything a company owes either currently or in the future. Tesla’s total liabilities in 2020 were $29.073B, which was an 8.31% growth from 2019, where they were at $26.84 billion (Helmold et al., 2022). The liabilities for 2021 were $31.116 billion, which increased by 7.03% from the previous year, 2020 (Helmold et al., 2022). Between the last three years, the change between 2019 and 2020 was the greatest compared to the other two years.
According to Tesla’s income statements and statements of cash flows, its sales for the year 2019 were $24,578 billion, which was a record 14.52% growth from the previous year. For 2020, its sales were $31,536 billion, another 28.31% growth from the revenue recorded in the year 2019. Finally, Tesla’s sales for the year rose by 70.67% from 2020 to $53,823 billion in 2021 (Helmold et al., 2022). This was a very significant growth in the company’s sales of cars.
The table below shows Tesla’s financial ratio analysis for the years 2018, 2019, 2020, and 2021.
Table 1. Financial ratios
|Return on Equity||–||-10.379||3.7356||21.06|
|Net Profit Margin||-4.5478||-3.5398||2.188||36.03|
The current ratio refers to a company’s ability to settle its obligations for a short term, usually within one financial year. For Tesla, in our case study, its current ratio was the highest in the year 2020, according to Table 1 above, which means that of all the years, in this case, 2020 was the year when the company could pay its short-term expenses with ease. The quick ratio refers to an organization’s ability to pay short-term costs using its liquid assets (Hermanson et al., 2011). Like in the current ratio, 2020 was when Tesla had the highest quick ratio.
The return on equity (ROE) measures the rate at which a given company generates profits. A company with a high ROE indicates that investors get more returns on the money invested. In this case study, the ROE for the year 2021 was the greatest, which means that the company’s profitability rate was the best then. The debt-to-equity ratio measures the risk investors make for investing their assets in a given company. It shows how much shareholders stand to make by investing each dollar in the company. The lower the debt-to-equity ratio, the better; hence 2021 had the best debt-to-equity ratio, meaning shareholders stand to make more from their investments that year.
Helmold, M., Küçük Yılmaz, A., Dathe, T., & Flouris, T. G. (2022). Financial SCRM and mitigation management. In Supply Chain Risk Management 46(5), 161-177.
Hermanson, R. H., Edwards, J. D., & Maher, M. (2011). Accounting and its use in business decisions. Accounting Principles: A Business Perspective 13(2), 29-64.