Financial

Management -
THE FINALE
THE OUTLINE
Meet the Company
General Motor Co.
Tesla Motor Co.
Horizontal and Vertical Analysis
Ratio Analysis
Once upon a time, there was one
boss looking for treasure
After long way from Urk
to United States, Huang
Si-Jin big boss faced by
two options of treasure.
Both of the treasures were
valuable. Which treasure
that big boss choose
 ! annyeonghaseyo!

I am Huang-Si Jin
Which Urk Treasure
I have to choose?
I am Wu-Mo Yeon
Im the guard of
General Motor
treasure.
Meet the Boss
General Motor
GENERAL MOTOR
One of the American multinational corporation
and one of oldest automotive company
Year Founded : 1908
Industry : Automotive
Headquartered in Detroit, Michigan
Number of employees : 216,000 (2015)
Divisions : Buick, Chevrolet, Cadillac, GMC
Brands : Transportation, Financial Service,
others
 DESCRIPTIONS

STRE 1. Global Presence

NGT 2. Large Market
HS 3. Strong Presence
in China
4. Robust Portfolio
Brand
5. Hold Large
Market share in
the Home
country
6. Strong
technological
capabilities

WEA 1. High-Cost
 DESCRIPTIONS

OPPOR 1. Likely growth

TUNIT in India
IES 2. Positive
attitude to
green vehicles
3. Growth
through
acquisitions
4. Focus on the
global market
5. Manage
employee-
management
relationship
I am Chang-Se Hwa
Im the guard of
Tesla treasure.
Meet the Rival
TESLA MOTOR COMPANY
TESLA MOTOR COMPANY
American automaker and energy storage
company, specialize in electric car,
powertrain components, produces
battery charging equipment
Industry : Automotive
Headquarter : Palo Alto, California, US
Number of Employees : 14,000 (2016)
Products : Model S, Model X, Model 3
 DESCRIPTIONS

STRE 1. Energy
NGT Efficiency
HS 2. Supplier to
Other
manufactures
3. Produce
environmental
friendly cars
4. Cost Reduction
advantages
5. Existing strong
investors and
partners

WEA 1. Bad impact on

KNES
 DESCRIPTIONS

OPPOR 1. Increasing
TUNIT demand of the
IES kind
2. Societies are
more concern
about
environmental
3. Some
countries like
USA offer
subsidy
program
4. Cost reduction
5. Autopilot?

THREA
Meet The
enemies
t
 Germany
France
United States of Italy Korea JAPAN
America
 Horizontal
and Vertical
Analysis
 EXTRACT OF INCOME
STATEMENT HORIZONTAL ANALYSIS VERTICAL ANALYSIS

2011- 2012- 2013- 2014-

GENERAL MOTORS 12 13 14 15 2011 2012 2013 2014 2015

Revenue 1.32% 2.08% 0.32% -2.29% 100% 100% 100% 100% 100%

Cost of Revenue 7.83% -2.88% 3.46% -5.68% 87.29% 92.9% 88.38% 91.14% 87.99%

Gross Profit -43.4% 66.97% -23.52% 32.55% 12.71% 7.1% 11.62% 8.86% 12.01%

Tot. Operating
Expenses 206.16% -68.62% -4.99% 9.18% 8.95% 27.04% 8.31% 7.87% 8.8%

Net Income -32.67% -13.61% -26.31% 145.3% 6.12% 4.06% 3.44% 2.53% 6.36%
RRevenue/Net income: Slow recovery during 2011-2014 with low revenue and net income due to
their recovery of bankruptcy in 2009.

Gross profit/Net income: High increase in 2015 thanks to high sales for their Chevy Camaro cars
and Colorado trucks especially in North America.

Operating expenses: a huge increase in 2012 due to the payment of flawed ignition switch of
their production around $594.5million
 Cash& Cash equivalents: Cash decreased in 2015 was due to that their ($500million)
investment on Lyft company to develop the driverless car.
Receivables: Increase in 2015 receivables is caused by the great performance in the North
American sales (high net income also).
Short-term/ Long-term debt : 2013-2015 higher compared to previous years due to that they
received the loan from the government for over $50billion to recovering themselves from the
bankruptcy.
 EXTRACT
OF INCOME HORIZONTAL VERTICAL
STATEMENT ANALYSIS ANALYSIS

2 2 2 2
0 0 0 0
1 1 1 1 2 2 2 2 2
1- 2- 3- 4- 0 0 0 0 0
1 1 1 1 1 1 1 1 1
TESLA 2 3 4 5 1 2 3 4 5

-
10 38 58. 26. 10 10 10 10 10
2.4 7.4 87 52 0 0 0 0 0
Revenue 5% 1% % % % % % % %

16 30 48. 34.
Cost of 7.8 6.5 81 79 70 93 77 77 77
Revenue
Revenue 2011-2012
3% 3% % %: There
% % is%high
% % increase due to the release of Tesla Model S in Q3 of 2012.
2012- 2013 : The overwhelming increase is due to the sales of the Model S across 2013, more
than -the Teslas forecast sales by 20%. The production plays a great role in this, which they
50. 14 93.
Gross were
82 20 able to 30
42 4.7 keep
7 up
23 the production with the sales (around 25,000 cars were sold).
28 23
Profit % % % 6% % % % % %
Cost of Revenue The high % cost of revenue is due to the heavy production at the Q3 of
Tot.
2012,trying to catch up with the number of reservation and forecast sales in 2013. The cost keep
Operatin increasing in 2013.
 EXTRACT OF INCOME
STATEMENT HORIZONTAL ANALYSIS VERTICAL ANALYSIS

2011- 2012- 2013- 2014-

TESLA 12 13 14 15 2011 2012 2013 2014 2015

Revenue 102.45% 387.41% -58.87% 26.52% 100% 100% 100% 100% 100%

Cost of Revenue 167.83% 306.53% 48.81% 34.79% 70% 93% 77% 77% 77%

Gross Profit -50.82% 1420% 93.42% 4.76% 30% 7% 23% 28% 23%

Tot. Operating
Expenses 35.46% 22.17% 106.37% 53.41% 153% 103% 26% 33% 41%

Net Income -55.91% 81.06% -292% -202.4% -125% -96% -4% -9% -22%
Gross Profit the low percentage in 2012 is due to high cost of revenue compared to the rev.

Operation Expense 2011-2012: Most of the expense goes to the R&D ,and sales/administrative
expense (for the Model S). Increase in 2014 & 2015 due to the development cost of Model X and
upgrade of Model S.

Net Income Tesla has been suffering loss during 2011 2015,due to their high operating
expense . Even though it is still minus, the net income in 2013 is better than the other years
due to high revenue and benefit from favorable foreign currency impact.
Cash- 2012 and 2015: low due to the high operating cash flow. The rest of the years are
maintained at around 30%
Inventory increase in 2012: due to that Tesla stock up the inventory to prepare for the
production and sales of Tesla Model S in 2013.
Account payable decrease in 2012 : due to the increase in inventory during that year too.
Non-current liabilities : tend to be stable over the past 5 years.

Stockholders equity : high in 2011 & 2013 due to the higher additional paid in-capital than
the retained earnings.
TESLA
RATIO
ANALYSIS
LIQUIDITY

Current Ratio
Quick Ratio
Cash Ratio
1. 2.

Current ratio and Quick ratio:

3. The trends between current, quick, and
cash ratio is similar because the changes is
driven by the same items (short term-debt,
cash)
The drop of Tesla in 2012 and 2015 due to
high operating cash flow
The drop of GM ratio in 2015 due to they
received loan from government
RATIO
ANALYSIS
LONG TERM SOLVENCY

Total Debt Ratio

Debt-Equity Ratio
Equity Multiplier
Cash Coverage Ratio
Times Interest Earned Ratio
 In 2011 and 2013, total debt ratio were
decreased due to higher of equity (higher
additional paid in-capital than the retained
earning)
GM tends to be stable , compared to Tesla.
Most of the Tesla minus value is due to the net
loss during their respective years.
General Motor: general motors ability to cover
interest is about the same the industry average.
Tesla: The ability to cover interest is about the
same the industry average. In 2011 and 2012,
Tesla interest expense was the lowest compare
to the industry average.
RATIO
ANALYSIS
ASSET TURNOVER

Inventory Turnover
Days Sales in Inventory
General Motor: Starting in 2011, GMs sales was getting higher especially in 2013 because, GM
sold 3,2 million vehicles in China and sold 11 percent more vehicles in the fourth quarter in
the worlds largest auto market and helped increasing the international sales 5% (1,2). But in
2015, the sales is lower than the industry because

Tesla: The inventory of Tesla is lower than the industry average because the pricey compare
to the other price. In order to reduce the inventory, Tesla do the inventory discount. Tesla
reduce the price (3)
 Days Sales Inventory
General Motor: Because the inventory turnover ratio of General motor is higher than the
industry average therefore the days sale in inventory is faster than the industry average,
except in 2015 because the inventory ratio is lower

Tesla: The inventory of Tesla is lower than the industry average because the pricey compare
to the other price. In order to reduce the inventory, Tesla do the inventory discount. Tesla
reduce the price (3)
RATIO
ANALYSIS
Receivable Turnover

Receivable Turnover
Days Sales in Receivables
Total Asset Turnover
General Motor: The receivable turnover is lower than the industry average

Tesla: The inventory of Tesla is higher than the industry average.

RATIO
ANALYSIS
Profitability

Profit Margin
EBITDA Margin
ROA
ROE
EBITDA Margin : GM tends to be stable , compared to
Tesla. Most of the Tesla minus value is due to the net
loss during their respective years.
 ROA and ROE =
General Motor tends to be stable, but they actually decrease a lot on 2013 due to
that the flawed ignition switch case which cause high expenses.

Tesla Due to their net loss every year, the ROA and ROE are all negative. - The net
loss was due to the high operating expenses.
Despite of its recovery from bankruptcy, GM still perform a little bit better than the
industry average.
RATIO
ANALYSIS
Market Value

PE Ratio
Market to Book Ratio
Market Capitalization
Enterprise Value
EV Multiplies
General Motor - The decreasing trend of the PE Ratio in 2011-2013
is caused by higher decrease in the net income due to high
operating expense during the release of the new Tesla Model S.

Tesla - Negative value of PE Ratio due to negative income. The

lowest was in the 2013.
 General Motor GMs market to book ratio seems to be quite stable from time to time. Their
market doesnt seems to be overvalued or vice versa. OVerall, they still perform lower than the
industry average. This is most likely because they are still on the recovery from their
bankruptcy period.
Tesla Teslas extraordinary high market to book ratio was due to the skyrocketed in their stock
price starts from March 2013 (jumps from $38 to the current price of $213). The 2012 was due to
low book value.
 General Motor GM shows that they are a highly
valued company with stable market capitalization
over the 5 years.
Tesla Teslas market capitalization shows it great
improvement over the past few years. This basically
means that the growth of Tesla would be able to
attract more investors.
General Motor The Enterprise value of GM shows a
increasing trend. This is due to their high debt which
they borrowed from the government during the
recovery of bankruptcy period.
Tesla The enterprise value also shows the same trends
for Tesla
 Compared to GM, Tesla has a very fluctuative EV
multipliers, this is due to their change in EBITDA. This
situation cause the Tesla is very hard to predict whether
they are actually overvalued or undervalued.