Advanced Financial AccountingLanfang (Julia) ZhengProf. MertinsChapter 3: 3.173.17 Interpreting the Statement of Cash Flows. Tesla Motors manufactures high performance electric vehicles that are extremely slick looking.Exhibit 3.20 presents the statement of cash flows for Tesla Motors for 2010–2012. Discuss the relations among net income, cash flows from operations,cash flows from investing acti
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Advanced Financial Accounting
Lanfang (Julia) Zheng
Prof. Mertins
Chapter 3: 3.17
3.17 Interpreting the Statement of Cash Flows. Tesla Motors manufactures high performance electric vehicles that are extremely slick looking.
Exhibit 3.20 presents the statement of cash flows for Tesla Motors for 2010–
2012. Discuss the relations among net income, cash flows from operations,
cash flows from investing activities, and cash flows from financing activities
for the firm over the three-year period.
- Net loss was from the net income statement
- Tesla is using a indirect method on their cash flow statement
- On cash flow from operation, the non cash transaction, the depreciation and
amortization, change in fair value of warrant, stock-based compensation,
liabilities, loss on abandonment of fixed assets, inventory write-downs, were
added back on cash flow statement
- change in inventories and operating lease vehicles, prepaid expenses, deferred
revenue were increased on income statement so they are deducted on cash flow
statement
- reservation payments was decreased on income statement and added back to cash
flow statement
- investing and financing activities doesn’t affect income statement
Describe what stage of life cycle these relations suggest for Tesla Motors. Why
are negative operating cash flows less than the net losses? Where is Tesla
obtaining cash, and what are they doing with it? What do you think will
happen with cash flows in 2013?
- The life cycle for Tesla Motors is in Introduction stage
- the firm is showing negative cash flow on both operation and investing and
positive cash flow on financing, which means the firm is distribute its cash from
financing to operation and investing
-The cash flow in 2013 possibly will remain the similar as 2013 or slightly change
in decreasing trend since the firm might do less investing and have less loss
3.22 Extracting Performance Trends from the Statement of Cash
Flows. The Apollo Group is one of the largest providers of private education,
and runs numerous programs and services, including the University of
Phoenix. Exhibit 3.25 provides the statement of cash flows for 2012.
Discuss the relations between net income and cash flow from operations and
among cash flows from operating, investing, and financing activities for the
firm, especially for 2012. Identify sig- nals that might raise concerns for an
analyst.
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