Financial Statements Analysis on Tesla

Tesla is in the news again. Tesla Incorporation (Inc.) has well engineered cars with extensive power and nominal emissions which had helped Tesla’s products to stand out and make a mark in this growing sector. Establishing its presence in the prominent markets of The United States, Europe, Asia and Canada, the reach of Tesla Inc. has been creditable. The gradual shift of the consumers towards the importance of environment-friendly automobile options has helped to facilitate this. Another reason why consumers seem to find the shift to electric cars feasible is the fact that consumers can now avoid the cumbersome process of fueling by going to a gas station. Instead, they can now charge their vehicles at home. But even after having potential market and new orders in the agenda of Tesla, Why the company ends up in declaring losses every year? This is a question in everyone’s mind. This study is an attempt to find answer/s to this question through Financial Statements analysis taking last three financial years i.e. 2015-2017. The current research has adopted descriptive method of research through secondary data. Financial Statements has been downloaded from the official website of Tesla Inc. and prepared Comparative and Common-size statements along with 17 financial ratios. This study observed that Gross Profit for the Company was in increasing trend in absolute figures but when compared as a percentage of sales it reveals that Gross Profit has been decreased from 23% in 2015 & 2016 to 19% in 2017. Coupled with this higher costs of Maintenance, Research and Development, Selling, General and Administrative expenses have triggered the company towards Net Loss.