Says Tesla's Financial Statement Risk Is Average - And That's A Good Thing

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The Accounting Analyst rates Tesla's financial statement accounting risk as medium. Large debt on the balance sheet and lower earnings quality due to revenue from regulatory credit sales are offset by a low-risk cash flow statement.

Tesla recently released data showing record number of vehicles delivered. Revenue and earnings look set to continue their upward trajectory. Tesla’s financial statements do not appear high-risk, but we caution investors to pay attention to source of earnings and look for signs of liquidity pressure.

The Accounting Analyst rates Tesla’s balance sheet and income statement as medium risk and its cash flow statement low risk. The balance sheet is medium risk for high debt and accounts payable, offset by rising cash and favorable debt and liquidity ratios. Income statement risk is medium, with low earnings quality due to regulatory credit sales and complex estimates, offset by rising organic revenue growth and operating cash flow greater than net income. Cash flow statement risk is low due to rising operating cash flow and minimal difference between operating cash flow and adjusted operating cash flow.

The overall rating for the financial statements is medium risk.

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Jason Williams
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