ACCT1115 Introductory Financial Accounting

CASE BACKGROUND:

You will be provided with the latest financial information pertaining to Tesla for Quarter 3 (Q3) of fiscal year 2020. This information has not been audited; it is simply presented by Tesla to its shareholders for investing purposes.

This case has been designed to give you the necessary tools required to analyze a complete set of financial statements and be able to formulate an educated opinion on whether the company is performing financially well. The financial statements presented contain information which is beyond the scope of this course. When you come across items that have not been covered in this course, make sure to stick to the basics of accounting and determine whether the item in question is a current asset, current liability or shareholder equity. For instance, a liability will require to be settled in an outflow of assets in the future. Make sure you keep in mind the foundational pieces of accounting and do not get stuck in in the details of more complex items. For intermediate accounting courses, these concepts will be covered in detail.

REQUIREMENTS:

You have recently graduated from your accounting degree at NAIT and now you are pondering your career decisions. You have a keen eye for automobiles, as well as emerging new technology because you understand the potential for investment in this sector. You quickly turn to your laptop and do some research on Tesla.

You learn that Elon Musk, one of its co-founders started the company in 2003, and the company’s “mission has been to accelerate the world’s transition to sustainable energy” ( (Elon Musk, 2021). You also learn that he started from humble beginnings where he spent his youth in junk yards picking parts for his 1978 BMW. Now, his net worth is more than $170 billion dollars. You become fascinated by this industry and decide to study the latest financial performance of his company, Tesla. You think to yourself: “If I show consistent passion as Elon Musk, I can start my own company one day.”

TO DO:

You have decided to summarize the most recent financial findings of Tesla. You prepare a written report that answers the questions and concerns below using the headings indicated in bold below. Your responses should provide clear and concise answers and recommendations. Your report must be written in APA format, including adequate formatting and references you have used. For certain questions, you must conduct external research. When ratio calculations are required, use year-end amounts, rather than averages.

Company Overview

1. According to your research, what are the primary business segments at Tesla? What are the company’s main product lines?

2. What are the main objectives of Tesla for the upcoming future? In your own words, do you think Tesla has a strategy of growth (increasing product lines), cost differentiation (charging a premium price for higher value items) or a product differentiation strategy (offering unique products)? (Hint: look at the Outlook section of the report).

3. Which companies are Tesla’s main competitors and why do you think this?

Tesla is listed on the public stock exchange. What is the stock price value today? Can you give me a comparative for since last week, last month, last year? (Hint: make sure you include exact dates for all these values.) What are the trends you notice?