Financial Position and Financial Performance
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Added on 2021-05-31
Financial Position and Financial Performance
Added on 2021-05-31
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ContentsEXECUTIVE SUMMARY.................................................................................................................................2INTRODUCTION...........................................................................................................................................2NAME OF COMPANY AND NATURE OF BUSINESS.......................................................................................3ANALYSING THE POSITION OF THE COMPANY............................................................................................3ANALYZING THE PERFORMANCE OF THE COMPANY...................................................................................7CONCLUSION AND RECOMMENDATION.....................................................................................................9REFERENCES................................................................................................................................................9APPENDIX..................................................................................................................................................10EXECUTIVE SUMMARYThe financial statement plays the significant role in assessing the results of the company. Thetitle of the report is analyzing the financial position and financial performance from the last twoyears and as of now where the Tesla stands. As the title suggests, there are three major aims ofthe report. The first major aim of the report is to analyze the financial position of the companyusing the data from the annual report of the company. The second aim is to analyze the financialperformance of the company using the data from annual report of the company. Along with thisprimary data, the report has used the secondary data sources. The last aim is to use the financialratios to understand the financial position and the financial performance of the company. Withthese considerations the report has been prepared and divided into different sections. INTRODUCTIONFinancial position and the financial performance of the company can be judged only through thefinancial statements of the company. The financial statements are embedded in the annual reportof the company. These financial statements are prepared for the users of the financial statementsso that they can have the meaningful and effective decision. In this report, the data of thecompany – Tesla Inc has been obtained and the analyses have been done accordingly. Thecompany is listed in United States Stock Exchange. At first the name of company and the natureof business of the company along with the background of the company have been detailed. After
that through the annual report of the company the financial position of the company has beenanalysed. For the purpose of the analyses, the annual report of the company for the year ending31st of December 2017 and 31st of December 2016 has been considered. Two years have beenconsidered for the same company only because of the fact of having more clear and precisecomparison with earlier year as base for computation. Then the financial performance of thecompany has been analysed as to whether the company is making profits or not and whether thecompany is generating the higher earnings to their investors. There are three methods foranalyses – one is vertical, other one is horizontal and the last one is ratio analysis. In the givenreport, the ratio analyses have been considered. The analyses have been made with reference tothe accounting ratios for profitability as well as liquidity. After the analyses, the appropriateconclusion and the recommendation has been suggested as to whether the investors shall investin this company or not keeping in consideration all the analyses made from the financialstatements. NAME OF COMPANY AND NATURE OF BUSINESSFor the purpose of conducting the analyses, the financial data of company – Tesla Inc has beentaken. Tesla Inc formed in the year of two thousand and thirteen in Delaware, United States ofAmerica. Its headquarters are located in Palo Alto, California, United States of America. Thecompany is engaged in the manufacturing of the all types of electric vehicles, storage devices forenergy and solar panel. The company has the production facilities and plants for assembly atdifferent locations. Since the year of its operations, the company has been earning profits andgood reputation in the market. The company uses the calendar year as the financial year and endsthe financial statements by 31st of December of each year. Therefore the form 10K has beenconsidered for obtaining the data and figures. ANALYSING THE POSITION OF THE COMPANYPosition is related to the standing as on particular date. In the common parlance if the personnelworking in an organization has been promoted from Manager to Director of the company thenthe position of that personnel earlier was Manager and now he is working ad Director of thecompany (Anastasia, 2015). The position is identified at the particular point of time. Similarly incase of company the financial position of the company can obtained only at the particular date
and point of time. For instance, the company provides the financial statements on 31st ofDecember 2017 then the financial position can be judged only on that day itself. The position of the company is analysed through the statement of the affairs or the balance sheetof the company as the case may be. Financial position will not only help in assessing the networth of the company but also helps in the knowing of the fact as to whether the company hasenough liquid funds, whether the assets have been correctly valued or not, whether the companyis able to achieve its short term liabilities as and when it becomes due and whether thecompany’s long term liabilities as stated in the balance sheet is at par or it has exceeded thelimits and so on (Taylor, 2011). For making analyses the financial ratios have been calculatedand then analyses have been made. Ratio has been calculated under the four major headings. Oneis profitability ratios, second is Liquidity ratio, third is Leverage Ratio and the last is theefficiency ratio. The ratios have been calculated for two years ending the 31st of December 2017and 31st of December 2016. It is because the benchmark as 2016 figures has been considered forthe purpose of the analyses. The financial ratios have been calculated and identified andaccordingly the analyses have been made. Liquidity Ratio – Liquidity ratio is one of the best measure through which the manager of thecompany can judge or assess the ability of the company to repay the short term liabilitiesincluding the liabilities towards the expenses. If the company is not maintaining its liquidity ratioat good level there will be chances that the company will go bankrupt or insolvent. Directors ofthe company are separately more concerned when the company fails to serve the interest andprincipal obligations when it falls due (Delen, 2013). It is because the liability of the directors ofthe company will be personal if the deposit of liabilities has not been maintained. -Current Ratio – It is one of the basic ratios which every company considers beforefinalizing the financial statements of the company. At first the current ratio is thefinancial ratio which helps in comparing the current assets and current liabilities. Itcompares as to whether the company will be able to make the payment of the liabilitiesthat is due in the near future and that too shall be paid within the period of one year. Inthe given case of Tesla Inc, the current ratio for the year 2016 was 1.07 and for the year2017 it was 0.86. The decrease in current ratio is the tremendous one. It means that thecurrent ratio has fallen down and it has been fallen by 80 cents. There are the chances
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