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COMPANY PROFILES
TESLA
Based on the ambition to create a better and quicker electric car, move towards zero-emissions, and provide more affordable clean transportation, Tesla was created. Today, it operates in the luxury brand vehicle market as well as the electronic vehicle market. Tesla strives for sustainability, safety, and capability. Tesla is a cutting-edge electric vehicle manufacturer. Tesla's product line includes Model S, Model X, Model 3, Model Y, and the Cybertruck. In addition to vehicles, Tesla also produces the Powerball, Powerpack, and Solar Roof.
HYUNDAI
Hyundai Motor Company is in automotive manufacturing industry. This worldwide operation has an extensive line of products including a variety of cars, trucks, buses, vans, and engines. Hyundai falls within the public sector. They take part in both manufacturing and distribution. Recently Hyundai announced that they will include 10 electrified vehicles in production by the end of 2022. They value collaboration, customers, globality, and challenge.
TOYOTA
Toyota designs, manufactures, assembles, and sells both vehicles and parts. Passenger vehicles, minivans, pickups, and commercial vehicles make up Toyota's product line. Toyota is popular for their hybrid vehicles: their attempt to get cleaner vehicles with better gas mileage. Like Tesla, Toyota operates in the luxury brand vehicle market through Lexus, Avalon, Crown, and Century. Toyota is committed to developing technologies to fulfill consumer's needs, providing clean and safe products, and creating an environment of teamwork and creativity.
WEEKLY STOCK PRICES
For this financial analysis, I tracked the closing prices of Tesla, Hyundai, Toyota, and S&P 500 from January 12, 2022 through April 20, 2022. Despite the overwhelming downward trend of the stock market this semester, Tesla’s stock performance started and ended at a very similar price. Meanwhile, Hyundai and Toyota stock have noticeably dropped in price. Although Tesla’s stock price has seen fluctuations in the past 14 weeks, S&P 500’s stock price has been extremely volatile. Tesla is outperforming its competitors, Toyota and Hyundai, as well as the overall stock indicator, S&P 500. However, we have to weigh this against the overall decline in the stock market.
A few of Tesla’s major drops in price are attributed to questionable events: Elon Musk facing legal trouble with the SEC due to his new Twitter investment, pushing back the release of the CyberTruck, and supply chain issues. Additionally, Tesla has put a significant amount of money into capital expenditures which makes investors nervous. Tesla is not the only electric vehicle manufacturer -- there are more electric vehicles now than ever before. Elon Musk is a controversial CEO to say the least: shortly after a strong quarter report that sent stock prices up, Musk tweeted that the shares are priced “too high,” causing them to drop 12%. Despite the stock market as a whole being down, I would not conclude that Tesla is underperforming.
RATIOS
Click here for data calculations and visualizations
TOTAL ASSETS /
TOTAL LIABILITY
Liquidity Ratio
REVENUE /
AVERAGE TOTAL ASSETS
Asset Management Ratio
TOTAL DEBT /
TOTAL ASSETS
Debt Management Ratio
(REVENUE * COST OF GOODS SOLD) /
REVENUE
Profitability Ratio
RATIO VISUALIZATIONS
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RECOMMENDATIONS
after analyzing the data
After some research, I found that a current ratio of 1-3 generally shows a healthy company. The higher the ratio, the more capable a company is of paying off its debt and obligations. Tesla has varied in its current ratio the past three years. In 2021, it could only pay its current obligations with its current assets 1.38 times over. To improve this ratio, I would recommend that Tesla decreases their total liabilities by paying off short-term obligations and selling assets that are not generating a return. Additionally, Tesla could improve their current ratio by increasing current assets: hold onto more cash (fund projects through debt - issue bonds) and increase inventory (produce more cars). Essentially, Tesla would need to increase current assets and/or decrease current liabilities.
Current Ratio
With this ratio, you generally want a higher number to show that a company is efficient in generating revenue from its asset base. Therefore, a lower ratio would show that a company is not efficiently using its assets. Keep in mind that Tesla invests in a lot of long-term assets, therefore, their asset base is large. Compared to its competitors, Tesla is generating more revenue per dollar of assets. To improve their asset turnover ratio, I would recommend that Tesla increases their net sales by advertising more on social media and releasing the Cybertruck. Tesla could decrease their average total assets by manufacturing less cars (decreasing inventory) initially and then manufacturing them as needed by demand.
Asset Turnover
On average, a debt ratio of 0.4 or lower is ideal -- anything over 0.6 makes it hard to borrow. A lower debt ratio can show that they are creditworthy or they are carrying too little debt. Tesla's low debt ratio indicates that most of their assets are fully owned: financed through their own equity rather than through debt. Because Tesla has a very good debt ratio, I would not recommend any major changes. However, if Tesla wanted to increase their debt ratio slightly, they could increase total debt and/or lessen total assets. To increase debt, Tesla can issue more stock or sell bonds. A simple way to decrease assets is to sell more cars! Tesla could increase sales by putting more information out there on why a Tesla vehicle is right for consumers. Another way to increase sales is to improve battery life, lessen the cost of production so the overall cost can go down, and increase the amount of charging stations along interstates.
Debt Ratio
Gross profit margin is calculated by first taking revenue and subtracting the cost of goods sold, and then dividing that number by revenue. This ratio shows teh percentage of revenue a company keeps after a sale when all costs are deducted. Tesla has improved in this area in the past 3 years and has surpassed its competitors, showing that they produce their vehicles more efficiently. One simple way to increase this number is to keep expenses low -- to lessen the cost of their goods, Tesla could find a new way to manufacture as well as invent a new battery that is cheaper to produce.
Gross Profit
BIBLICAL INTEGRATION
"Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ.
Do not work for human masters, rather work for God. When we are working for a good and perfect Master, our work has more meaning and we take more pride in it. It is ultimately God judging all we do, therefore, serve Him in all you do.
Work as if you are working for God Himself.
Colossians 3:23-24
"When pride comes, then comes disgrace, but with the humble is wisdom."
There is a sharp contrast between pride and humility. Pride is arrogance: someone who does not see the need for God's hand in their work and live to please themselves. Humility recognizes the need for God and seeks to glorify Him. The prideful are dishonest, overconfident, and without hope. In God, we can have true wisdom in our humility.
The righteous follow God's will, are blessed with wisdom, and bring honor to God.
Proverbs 11:2
"For what does it profit a man to gain the whole world and forfeit his soul?"
The amount of money you have in the bank does not compare to the gift we have in Jesus. Seek first the Kingdom of God. The riches of this earth do not compare to the coming promises of God. This world does not have what we need to be happy and fulfilled -- God does. To follow Him, we will have to sacrifice here on earth. But, the greatest glory is promised to His followers.
Mark 8:36
