Investors weighing the risks of volatility against debt in company evaluations may find Tesla (NASDAQ:TSLA) Inc.'s recent financials of particular interest. The electric vehicle giant, with a market valuation of $749 billion, has seen its debt climb to $3.7 billion. However, this is balanced against a robust $26.1 billion in cash reserves, resulting in a net cash position of $22.4 billion.
Looking at the company's upcoming financial obligations, Tesla faces $26.6 billion in short-term liabilities and $12.8 billion in long-term debts. These figures are set against $28.8 billion in short-term assets, which include $2.7 billion in receivables, suggesting a sound liquidity position.
Despite these significant numbers, Tesla's earnings before interest and tax (EBIT) have dropped by 14% over the past year. This downward trend could potentially affect the company’s ability to manage its debts if it continues. Nonetheless, Tesla has demonstrated financial resilience by converting 60% of its EBIT into free cash flow over the last three years. This conversion rate is a positive sign for the company's ability to meet its financial commitments without compromising liquidity or diminishing shareholder value.
InvestingPro Insights
Investors who are closely monitoring Tesla Inc.'s financial health will appreciate the latest insights provided by InvestingPro. With a significant market capitalization of $766.76 billion and a robust revenue growth of 28.13% over the last twelve months as of Q3 2023, Tesla is demonstrating strong financial performance in the competitive automobile industry.
One of the key InvestingPro Tips to consider is that Tesla holds more cash than debt on its balance sheet, which is indicative of a strong liquidity position. This aligns with the company's reported net cash position and is a vital metric for investors considering the company's ability to manage its financial obligations. Additionally, Tesla operates with a high return on assets, at 12.76% for the same period, suggesting efficient use of its asset base to generate profits.
In terms of valuation, Tesla is trading at a high earnings multiple with a P/E ratio of 70.94. This reflects investor confidence in the company's future growth prospects but also indicates a premium pricing for the stock. Investors should note that Tesla's stock price movements have been quite volatile, which is an important consideration for those looking for stable returns.
For those seeking more in-depth analysis, InvestingPro offers an array of additional tips, with a total of 19 InvestingPro Tips available to subscribers. These tips provide a comprehensive look at Tesla's financial metrics, industry position, and stock performance. Currently, InvestingPro subscription is on a special Black Friday sale with a discount of up to 55%, making this an opportune time to access these valuable insights.
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