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Tesla (LIM:TSLA) Financial Strength

: 10 (As of Dec. 2022)
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Tesla has the Financial Strength Rank of 10. It shows strong financial strength and is unlikely to fall into distressed situations.

Good Sign:

Tesla Inc shows strong financial strength.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Tesla's Interest Coverage for the quarter that ended in Dec. 2022 was 119.24. Tesla's debt to revenue ratio for the quarter that ended in Dec. 2022 was 0.06. As of today, Tesla's Altman Z-Score is 11.89.


Competitive Comparison

For the Auto Manufacturers subindustry, Tesla's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Tesla Financial Strength Distribution

For the Vehicles & Parts industry and Consumer Cyclical sector, Tesla's Financial Strength distribution charts can be found below:

* The bar in red indicates where Tesla's Financial Strength falls in comparison to its industry or sector. The grey bar indicates the Financial Strength's extreme value range as defined by GuruFocus.



Tesla Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

Tesla's Interest Expense for the months ended in Dec. 2022 was $-33 Mil. Its Operating Income for the months ended in Dec. 2022 was $3,935 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2022 was $3,761 Mil.

Tesla's Interest Coverage for the quarter that ended in Dec. 2022 is

Interest Coverage=-1*Operating Income (Q: Dec. 2022 )/Interest Expense (Q: Dec. 2022 )
=-1*3935/-33
=119.24

The higher the ratio, the stronger the company's financial strength is.

Good Sign:

Ben Graham prefers companies' interest coverage to be at least 5. Tesla Inc has enough cash to cover all of its debt. Its financial situation is stable.

2. Debt to revenue ratio. The lower, the better.

Tesla's Debt to Revenue Ratio for the quarter that ended in Dec. 2022 is

Debt to Revenue Ratio=Total Debt (Q: Dec. 2022 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(1987 + 3761) / 97272
=0.06

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Tesla has a Z-score of 11.89, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 11.89 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Tesla  (LIM:TSLA) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Tesla has the Financial Strength Rank of 10. It shows strong financial strength and is unlikely to fall into distressed situations.


Tesla Financial Strength Related Terms

Thank you for viewing the detailed overview of Tesla's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.


Tesla (LIM:TSLA) Business Description

Tesla logo
Address
13101 Tesla Road, Austin, TX, USA, 78725
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. The company sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. Tesla has multiple vehicles in its fleet, which include luxury and midsize sedans and crossover SUVs. The company also plans to begin selling more affordable sedans and small SUVs, a light truck, a semi truck, and a sports car. Global deliveries in 2022 were a little over 1.3 million vehicles.

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