FIN 320 Final Project Financial Analysis Report

Financial Analysis, Financial Evaluation, and Financial Recommendations

1. Financial Analysis
2. Financial Calculations:

• Working capital:
  • The business’s working capital was $29.640,000 in the most recent quarter and $21,050,000 in the same quarter last year. As a result, the working capital ratio characterizes the amount of money a company must use for daily operations. It displays the liquidity of a company’s finances (Louw et al., 2022). Tesla Inc.’s financial situation is sound compared to the two fiscal periods: FIN 320 Final Project Financial Analysis Report.
• Current ratio:
  • In the most recent fiscal quarter, the company’s current ratio was 1.99, while in the same quarter last year, it was 1.71. Over the last two fiscal quarters, the company’s current ratio has increased. The ratio’s value is greater than one, indicating that the business can fully pay its short-term maturing debts when they become due.
• Debt ratio:
• Tesla Inc.’s debt ratio was 0.39 in the most recent fiscal quarter. In the same quarter last year, the same ratio had a value of 0.40. The debt ratio indicates the proportion of the company’s assets financed by borrowing. A consistent financial performance is shown by the ratio’s negligible growth in value over the two fiscal quarters.
• Earnings per share:
• The company’s earnings per share ratio was 0.12 in the most recent fiscal quarter. The ratio increased, with a value of 0.47 in the same quarter last year. The increase shows that the financial performance of profit per unit has improved.
• Price and earnings ratio:
• In the most recent fiscal quarter, Tesla Inc.’s price-earnings ratio was 364.79, whereas, in the same quarter last year, it was 348.94. The price-earnings ratio evaluates a company’s financial health, which considers growth and market value. The company’s financial health has deteriorated according to this metric.
• Total asset turnover ratio:
• A 0.15 asset turnover ratio was observed for the most recent fiscal quartet assessed. The value for the metric a year ago was 0.067, indicating a reduction in financial performance. Essentially, this could be due to a reduced level of asset management.
• Financial leverage:
• In the most recent fiscal quarter, the company’s financial leverage was 1.66, while in the same fiscal quarter last year, it was 1.67 for Tesla Inc. The ability of a business to turn a profit on borrowed capital determines its financial leverage. The value of this statistic increased marginally during both examined fiscal periods. The decline in shareholder equity is the main cause of the increase.
• Net profit margin:
• In the most recent quarter, Tesla Inc.’s net profit margin was 21.97%, compared to 27.76% in the same period last year. By examining an organization’s net profit, the net profit margin calculates its profitability. Due to a 5.79 percent decline in net profit margin over the two fiscal quarters, Tesla Inc.’s financial situation has gotten worse. The decline could result from the company’s overall income declining throughout the two periods and its expenses increasing.
• Return on assets:
• In the most recent fiscal quarter, the business’s return on assets was 0.003, while in the same fiscal quarter last year, it was 0.013. A company’s return on assets can be used to gauge its profitability. This ratio indicates that Tesla Inc.’s financial situation has improved throughout the two fiscal quarters under review. Better asset management in the most recent fiscal seasons may cause an increase. For instance, the business decreased the stock typically kept throughout each quarter.
• Return on equity:
• Tesla Inc.’s return on equity was 2.16 for the same fiscal quarter last year and 0.056 for the most recent quarter. Notably, this metric assesses a company’s financial standing in terms of generating profits for stock held by the business. However, because there was a positive change six between the two quarters, comparing them shows better financial health. For instance, the management’s use of equity capital to grow the company was more effective.

1. Working Capital Management:

One of the primary purposes of working capital is to provide cash flow for short-term maturing commitments like rent, salary, and other costs. The speed at which an organization’s current liabilities and net assets are turned into cash is known as the net operational cycle, and it is essential because it ensures that the cash conversion cycle is seamless. Effective working capital management can increase a company’s profitability by using its resources better (Kayani et al., 2019).

Working capital management includes, among other things, accounts payable, inventory control, and accounts receivable. For instance, extending the time it takes to pay suppliers can help Tesla Company better manage its working capital by reducing costs and accelerating the collection of accounts receivable. According to Habib et al. (2024), working capital helps an organization maximize the return on asset investments while lowering the amount of money it spends on management by guaranteeing it has enough cash to pay off all its debts and commitments.

1. Financing:

There are two ways for an organization to finance its operations and growth. The two consist of debt and equity finance. By issuing additional shares to the public through an initial public offering (IPO), equity financing involves obtaining funds from the public.

Large businesses like Tesla Incorporation may use this funding source since it is less hazardous. However, using this method to raise money is time-consuming and requires a lot of legal paperwork. When it comes to debt financing, a business has several financial choices.

These choices include bond securities, bank loans, and debentures. A business may generate funds quickly with this strategy (Klinge et al., 2025). It may, however, place a company in a precarious situation regarding its liquidity.

1. Short-Term Financing:

The ability of a business to raise money for liquidity commitments depends on short-term financing. The corporation under analysis is now in outstanding financial health. The company is at risk of experiencing financial troubles because its current ratio is less than two, which is the industry-recommended figure.

Accordingly, using options for short-term funding, such as marketable securities, can increase the company’s liquidity and lessen the strain of meeting short-term maturing liabilities (Huang, 2023). They could thereby strengthen the business’s immediate

financial situation.

1. Bond Investment:

One kind of debt that gives the company the money it needs to run its operations is a corporate bond. Corporate bonds are special because they allow businesses to raise more money without borrowing money from banks or selling shares. Bond investment entails some dangers as well as advantages. Bonds are a strong source of income due to their advantages; they diversify an enterprise’s portfolio, give good capital gains, and pay higher interest rates when they align with government bonds (Chap & Liu, 2024).

Regarding risks, investing in bonds may entail calling risks, which might result in the bonds being lost, as well as liquidity risks, which could make it challenging to sell them. Ethical considerations also influence bond issuance; corporations with low credit ratings have a harder time selling bonds than their rivals with excellent credit ratings.

1. Capital Equipment:

Purchasing capital equipment affects working capital in various ways. Therefore, it is necessary to weigh the advantages and disadvantages of capital investment. Regarding the advantages, investing in capital equipment guarantees that the firm owns the asset as a whole, generates savings while taking allowances for capital and tax considerations into account, and shortens the company’s long-term relationships through loans (Danda, 2024).

However, capital equipment investments need large sums of money, so they can be dangerous and generate cash flow issues for the business. When considering ethical considerations, capital equipment can be costly for small enterprises, resulting in unfair competition from larger companies. For instance, major companies like Tesla Inc. can utilize their power unfairly to attain capital equipment and push minor competitors out of the technology market.

1. Capital Lease:

Leasing equipment briefly to fulfill a specific goal is known as capital leasing. Leasing equipment can avoid long-term expenses like capital equipment taxes and depreciation that might negatively impact the company’s financial standing (Putra & Khaddafi, 2024). Regarding risk, renting capital equipment might cost much money over time.

2. Financial Evaluation

 

1. Bond Investment:

Since the bond bears a negative net present value, Tesla Inc. should not invest in bonds. Any investment with a negative net present value is a loss for the company and ought to be avoided. In essence, Tesla Inc. will assume the risk of suffering a loss by purchasing the bond.

The bond investment’s net present value was determined to be -$16,421,054. The ethical issue surrounding the use of child labor by a business under contract with the bond issuer should also be considered when investing in bonds. Notably, the investment should not be made since it is immoral.

1. Capital Equipment:

Investments in capital equipment are a wise choice for Tesla Inc. Interestingly, the capital equipment’s net present value computation shows a positive net present value of $2,243,458, indicating a substantial profit. Therefore, it is advised that the business proceed with this. Regarding ethics, the capital equipment option produces much waste that is bad for the environment.

Guidelines for environmental protection should thus be implemented in conjunction with adopting this option. For instance, the business should spend money on renewable energy to keep the equipment operating.

1. Capital Lease:

When the investment’s net present value is considered, Tesla Inc. finds that a capital lease for the building is a viable alternative. The option has a favorable and optimistic net present value of $864,920 regarding financial credibility. However, the corporation will incur higher expenditures because of the ethical and regulatory front.

Essentially, the expenses were associated with restoring the facility to the local government’s regulatory requirements and clearing out the waste the previous occupant had left behind. The business will gain more popularity in the market and enhance its reputation by doing this.

3. Future Financial Considerations:

Tesla Inc. is probably going to keep doing well financially in the future. Notably, the company’s ability to sustain strong financial success over two quarters separated by a year lends credence to this. Additionally, the computed financial ratios show the company’s generally sound financial standing, which is anticipated to be true going forward.

References

Chap, S., & Liu, J. (2024). Debt Risk Analysis of Automotive Enterprises. Economics & Management Information, 1-15. https://doi.org/10.62836/emi.v3i3.223

Danda, R. R. (2024). Financial Services in the Capital Goods Sector: Analyzing Financing Solutions for Equipment Acquisition. Library Progress International, 44(3), 25066–25075. https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=5022977

Habib, A. M., Yang, G. L., & Cui, Y. (2024). Do competitive strategies affect working capital management efficiency? Business Process Management Journal, 30(5), 1716-1736. https://doi.org/10.1108/BPMJ-12-2023-0953

Huang, W. (2023). Understanding Tesla’s Financial Strength: Analysis of Financial Reports and DuPont Analysis. Highlights in Business, Economics and Management, 6, 250–261.

Kayani, U. N., De Silva, T. A., & Gan, C. (2019). A systematic literature review on working capital management–an identification of new avenues. Qualitative Research in Financial Markets. https://doi.org/10.1108/QRFM-05-2018-0062

Klinge, T., Ouma, S., & Hendrikse, R. (2025). Capitalizing on conjunctures: Tesla’s ups and downs in financialized capitalism. Finance and Society, 1-20. https://doi.org/10.1017/fas.2024.23

Louw, E., Hall, J. H., & Pradhan, R. P. (2022). The relationship between working capital Management and profitability: evidence from South African retail and construction firms. Global Business Review, 23(2), 313-333. https://doi.org/10.1177/0972150919865104

Putra, O. P., & Khaddafi, M. (2024). The Impact of Capital Lease Implementation on Corporate Financial Statements: Theoretical Analysis and Case Studies. Advances In Social Humanities  Research, 2(8), 1030-1035. https://doi.org/10.46799/adv.v2i8.268

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FIN 320 Final Project Guidelines and Rubric

Competencies

In this project, you will demonstrate your mastery of the following competencies:

• Analyze financial and investment decisions that add value to the organization
• Analyze financing options to maximize investor value

Overview

This assignment is the last in the sequence that includes Final Project Milestones One and Two. In Milestone One, you introduced the business you chose. You examined its financial statements and financial health and reported its financial values.

In Milestone Two, you made calculations based on the information found using Mergent Online about your company and compared the totals with those of one year ago. You then used those figures to decide whether short-term financing was needed to improve your company’s financial health.

In this final stage of your Final Project, you will use the information you’ve accumulated thus far and make decisions on whether any or all of the following are appropriate directions for your company. Review the assumptions about this company located in the Final Project Financial Assumptions document.

Note: All documents and resources that are needed to complete this assignment are linked in the What to Submit and Supporting Materials sections.

Scenario

The CFO of your company has asked for your support in preparing a report for the business’s board of directors. Many of the board members are new, and some of them have little background in finance. With this in mind, you will need to write a report that all board members can easily understand.

Directions

Specifically, you must address the following rubric criteria:

1. Financial Analysis: In prior assignments, you calculated some of the financial formulas using quarterly financial statements from your chosen business and the Final Project Financial Formulas worksheet. For the financial analysis, edit prior work based on feedback and include it in this final project.
   1. Financial Calculations: Accurately calculate financial formulas to figure out the business’s current financial health. You must calculate the following:
      1. Working capital
      2. Current ratio
      3. Debt ratio
      4. Earnings per share
      5. Price and earnings ratio
      6. Total asset turnover ratio
      7. Financial leverage
      8. Net profit margin
      9. Return on assets
      10. Return on equity
   2. Working Capital Management: Explain the impact of working capital management on a typical business’s operations. Provide examples to support your claims.
      1. Why is it important for a business in general to carefully manage its working capital?
         

         FIN 320 Final Project Financial Analysis Report

   3. Financing: Explain the options available for a company in general to finance its operations and expansion.
   4. Short-Term Financing: Explain how potential short-term financing sources could help any business raise funds for improving its financial health.
   5. Bond Investment: Discuss the risks and benefits of any business investing in a corporate bond. Include the necessary ethical factors, appropriate calculations, and examples to support your analysis.
   6. Capital Equipment: Discuss the risks and benefits of any business investing in capital equipment. Include the necessary ethical factors, appropriate calculations, and examples to support your analysis.
   7. Building: Discuss the risks and benefits of any business investing in a building, including leasing substantive physical assets like buildings. Include the necessary ethical factors, appropriate calculations, and examples to support your analysis.
2. Financial Evaluation: In this step, you will use the knowledge you’ve accumulated thus far and make decisions on whether any or all of the following are appropriate directions for your chosen company. Assume that the situations located in the Final Project Financial Assumptions document are true of your chosen company. For each of the options below, include the necessary ethical factors, appropriate calculations, and examples from previous milestones to support your analysis. Based on your company’s financial health, you should consider:
   1. Bond Investment: Determine if the bond investment is a good financing option for your chosen business’s financial health. Use your financial analysis and other financial information to support your claims.
   2. Capital Equipment: Determine if the capital equipment investment is a good financing option for your chosen business’s financial health. Use your financial analysis and other financial information to support your claims.
   3. Building: Determine if the building investment is a good financing option for your chosen business’s financial health. Use your financial analysis and other financial information to support your claims.
3. Future Financial Considerations: Describe your chosen business’s likely future financial performance. Base your description on the business’s current financial well-being and risk levels. This time, do not consider the assumptions in the Final Project Financial Assumptions document. Use your chosen company’s most current financial information to support your claims.

Milestones

Milestone One:
In Module Two, you will submit a short paper that introduces your chosen company and summarizes the results of the company’s latest balance statement, income statement, and cash flow statement. This milestone will be graded with the Final Project Milestone One Rubric.

Milestone Two:
In Module Five, you will submit a short paper that compares your chosen company’s latest status with the values of one year ago. You will use this information to decide whether short-term financing can help improve your company’s financial health. This milestone will be graded with the Final Project Milestone Two Rubric.

Final Submission:
In Module Seven, you will submit a short paper that describes whether your chosen company should make specific investments based on its financial health. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Rubric.

What to Submit

To complete this project, you must submit the following:

Financial Analysis Report
Submit your completed Final Project Financial Analysis Report.

All sources should be cited according to APA style. This includes sources listed in your Final Project Financial Formulas workbook. Consult the Shapiro Library APA Style Guide for more information on citations.

Workbook: Final Project Financial Formulas
Use this Microsoft Excel workbook to complete your calculations for the project. You should have already completed the Ratios worksheets for your Final Project Milestone Two assignment. Check your instructor’s feedback on Final Project Milestone Two and incorporate any necessary changes.

Shapiro Library Resource:
Use this resource to help you complete this project.

• Mergent Online