FIN 320 Module Five Activity

Financial Statements

The calculation of working capital depends on the balance sheet data. More precisely, current assets and current liabilities are taken from the balance sheet and put into the calculation: Working Capital = Current Assets – Current Liabilities (Cao, 2023). Tesla’s consolidated balance sheets in the quarterly 10-Q reports give these statistics. On March 31, 2024, Tesla’s balance sheet noted that its total current assets were valued at $50,535 million, and its total current liabilities were valued at $29,453 million: FIN 320 Module Five Activity.

Other reports, such as the cash flow statement, show changes in working capital, but the balance sheet data is used to calculate it. From Tesla’s financial statements, the working capital for the first quarter of 2024 amounts to $50,535 − $29,453, and for Q1 of 2025, it comes to $59,389 – $29,753 (values indicated in millions).

Working Capital’s Role

Managing a business’s working capital is very important for it to be financially stable. Maintaining good management over working capital helps companies make sure they are liquid enough to settle their current liabilities and, at the same time, use their resources prudently. Notably, this is needed to avoid cash shortages that stop you from meeting your bills when payments are due. Businesses with higher working capital can cover regular costs without taking out emergency loans.

Good working capital management in Tesla means the company receives and uses its sales cash quickly and settles with its suppliers quickly. According to Tesla (SEC, 2024), it can receive cash from customers sooner than it pays its suppliers. Tesla generates positive cash flows because its cash position improves when customers pay for its goods upfront, while it takes some time to settle its bills.

Working Capital Interpretation

The working capital of Tesla can be figured out using the formula (Current Assets – Current Liabilities) for each applicable period. As of Q1 2024, the working capital was about $21.1 billion (made by computing the difference between $50,535M in total current assets and $29,453M in current liabilities). Notably, this indicates that in early 2024, Tesla’s assets exceeded its current obligations.

Tesla’s current ratio shows that it had about $1.7 current assets for each $1 of short-term liability, a position that gives it plenty of liquidity. Before March 31, 2025 (Q1 2025), working capital increased and reached almost $29.6 billion ($59,389 M – $29,753 M). In the next two years, Tesla will have the cash to meet all its ongoing needs as its short-term assets surpass its short-term debts and payables.

Working Capital Management Trend

The past few years have seen Tesla’s working capital rise, which signals that the company has better liquidity pending its growth. In December 2021, Tesla’s total working capital was $7.4 billion. At the end of 2022, this amount had nearly doubled and was close to $14.2 billion. Tesla has continued to trend in the same way through 2023 – its working capital balanced at $20.9 billion by the end of the year.

Due to greater cash levels, more inventory for sales, and contained payables, the company’s performance was noteworthy from the previous year. In the years following, Tesla’s financial strength in the short term kept getting better. By the last quarter of 2024, the company’s working capital was equal to approximately $29.5 billion, and it remained at the same level in Q1 2025. It is observed that the current ratio grew from 1.5 in 2022 to 1.7 in 2023 and another rise to 2.0 in late 2024/early 2025, demonstrating that the company’s liquidity buffer has increased over time.

References

Cao, Z. (2023). Financial Analysis and Valuation of Tesla, Inc. Advances in Economics, Management and Political Sciences, 42, 217-224.

SEC. (2025). Tesla Inc. Annual Reports. https://www.sec.gov/Archives/edgar/data/1318605/000162828024017503/tsla-20240331.

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FIN 320 Final Project Milestone Two Guidelines and Rubric

Overview

This is the second milestone leading up to your final project. In Final Project Milestone One, you introduced the business you chose. You examined its financial statements and financial health and reported its financial values. In Final Project Milestone Two, you will make calculations based on the latest information found using Mergent Online about your company and compare the totals with those of one year ago.

You will then use these figures to decide whether short-term financing is needed to improve your company’s financial health. Before moving forward, review your instructor’s feedback for Milestone One and incorporate any suggestions.

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

For the company you chose for your final project, open the following documents:

• The balance sheet, income statement, and cash flow statement from the latest fiscal quarter (from Mergent Online)
• The Ratios Most Recent Fiscal Qtr worksheet in the Final Project Financial Formulas workbook (linked in the What to Submit section).
  • example, if the latest fiscal quarter available is the third quarter in 2023, you’ll compare those results to the same financial calculations from the third quarter in 2022.

Use the documents to calculate key financial ratios.

Then open the following documents:

• The balance sheet, income statement, and cash flow statement from the same fiscal quarter one year ago
• The Ratios Same Fiscal Qtr 1 Year Ago worksheet

Use the documents to calculate the same financial ratios. Finally, compare those ratios and analyze your results.

Specifically, you must address the following rubric criteria:

FIN 320 Module Five Activity

1. Financial Calculations. Calculate accurate financial formulas to assess the business’s current financial health. Specifically, calculate the following formulas using the Ratios Most Recent Fiscal Qtr and the Ratios Same Fiscal Qtr 1 Year Ago worksheets in the Final Project Financial Formulas workbook:
   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. Fiscal Quarter Comparison. Summarize the differences between the following:
   1. The results from your financial calculations of the most recent fiscal quarter
   2. The results of the same financial calculations of the same fiscal quarter from one year ago
      1. For example, if the most recent fiscal quarter available is the third quarter in 2023, you’ll compare those results to the same financial calculations from the third quarter in 2022.
3. Comparison Analysis. Explain what your calculations and comparison show about the business’s current financial health. Give examples to support your explanation for the following questions:
   1. Do the results show the business is financially healthy or unhealthy? Which results indicate this?
   2. What might be the causes of the business’s financial success or failure?
   3. Is more information needed to determine the business’s financial health? If so, which pieces of information might still be needed?
4. Short-Term Financing. Explain how potential short-term financing sources could help the business raise funds needed to improve its financial health. Base your response on the business’s current financial information.

What to Submit

Your submission should be a 2- to 3-page Word document (not including title and resource pages) with 12-point Times New Roman font, double spacing, and one-inch margins. Include the Balance Sheet and Income Statement from Mergent Online with your submission. All sources should be cited using APA style. You must also use the Final Project Financial Formulas workbook and submit the following worksheets:

• The Ratios Most Recent Fiscal Qtr worksheet from the Final Project Financial Formulas workbook
• The Ratios Same Fiscal Qtr1 Year Ago worksheet from the Final Project Financial Formulas workbook