Review the statement of cash flows for Tesla Motors Inc. in ATC 14-1 on page 688. Discuss the cash position of the company by considering the following:Does the company’s cash flow position appear to be improving? Cash flows from operating activities:Net lossAdjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortizationStock-based compensationAmortization of discount on convertible debtTESLA INC.Consolidated Statements of Cash Flows(in thousands)Inventory write-downsLoss on disposal of property and equipmentForeign currency transaction (gain) lossGain on the acquisition of SolarCityNon-cash interest and other operating activitiesChanges in operating assets and liabilities, net of effect of business combinationsAccounts receivableInventories and operating lease vehiclesPrepaid expenses and other current assetsMyPower notes receivableOther assetsAccounts payable and accrued liabilitiesDeferred revenueCustomer depositsResale value guaranteeOther long-term liabilitiesNet cash flows from operating activitiesCash flows from investing activities:Purchases of property and equipment excluding capital leases, net of salesPurchase of solar energy system, to be leasedPurchase of short-term investments and marketable securitiesMaturities of short-term marketable securitiesIncrease in restricted cashCash acquired through (used in) business combinationsNet cash flows from investing activitiesCash flows from financing activities:Proceeds from issuance of common stock in initial public offeringProceeds from issuance of convertible and other debtRepayments of convertible and other debtCollateralized lease borrowingProceeds from exercise of stock options and other stock issuancesPrincipal payments on capital leasesCommon stock and debt issuance costsProceeds from issuance of warrantsProceeds from issuance of common stock in private placementsPurchase of convertible note hedgesProceeds from investment by noncontrolling interests in subsidiariesDistributions paid to noncontrolling interests in subsidiariesNet cash flows from financing activitiesEffect of exchange rate changes on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of periodFor the Years Ending Decemb20152016$ (773,046)947,099334,22587,28665,52034,633(29,183)(88,727)(7,775)(216,565)(2,465,703)56,8063,468(52,821)750,640382,962388,361326,934132,057(123,829)(1,280,802)(159,669)16,667(206,149)213,523$(1,416,430)$1,701,7342,852,964(1,857,594)769,709163,817(46,889)(20,042)201,527(21,250)3,743,976(7,409)2,196,3081,196,908$3,393,216$ (888,663)422.590197,99972,06344,94037,72355,76526,37346,267(1,573,860)(29,595)(24,362)263,345322,20336,721442,29523,697(524,499)(1,634,850)(26,441)(12,260)$(1,673,551)$ 730,000318,972568,745106,611(203,780)(17,025)20,0001,523,523(34,278)(708,805)1,905,713$1,196,908a. As this chapter explained, many companies that report net losses on their earnings statements report positivecash flows from operating activities. How do Tesla's net incomes compare to its cash flows from operating Page 689activities?b. Based only on the information in the statements of cash flows, does Tesla appear to be growing the capacity of itsbusiness? Explain.c. In 2016, Tesla paid off $1.9 billion of "convertible and other debt." Where did it get the funds to repay this debt?d. All things considered, based on the information in its statements of cash flows, does Tesla's cash position appear to beimproving or deteriorating?

Question

Review the statement of cash flows for Tesla Motors Inc. in ATC 14-1 on page 688. Discuss the cash position of the company by considering the following:Does the company’s cash flow position appear to be improving? Cash flows from operating activities:Net lossAdjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortizationStock-based compensationAmortization of discount on convertible debtTESLA INC.Consolidated Statements of Cash Flows(in thousands)Inventory write-downsLoss on disposal of property and equipmentForeign currency transaction (gain) lossGain on the acquisition of SolarCityNon-cash interest and other operating activitiesChanges in operating assets and liabilities, net of effect of business combinationsAccounts receivableInventories and operating lease vehiclesPrepaid expenses and other current assetsMyPower notes receivableOther assetsAccounts payable and accrued liabilitiesDeferred revenueCustomer depositsResale value guaranteeOther long-term liabilitiesNet cash flows from operating activitiesCash flows from investing activities:Purchases of property and equipment excluding capital leases, net of salesPurchase of solar energy system, to be leasedPurchase of short-term investments and marketable securitiesMaturities of short-term marketable securitiesIncrease in restricted cashCash acquired through (used in) business combinationsNet cash flows from investing activitiesCash flows from financing activities:Proceeds from issuance of common stock in initial public offeringProceeds from issuance of convertible and other debtRepayments of convertible and other debtCollateralized lease borrowingProceeds from exercise of stock options and other stock issuancesPrincipal payments on capital leasesCommon stock and debt issuance costsProceeds from issuance of warrantsProceeds from issuance of common stock in private placementsPurchase of convertible note hedgesProceeds from investment by noncontrolling interests in subsidiariesDistributions paid to noncontrolling interests in subsidiariesNet cash flows from financing activitiesEffect of exchange rate changes on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of periodCash and cash equivalents at end of periodFor the Years Ending Decemb20152016$ (773,046)947,099334,22587,28665,52034,633(29,183)(88,727)(7,775)(216,565)(2,465,703)56,8063,468(52,821)750,640382,962388,361326,934132,057(123,829)(1,280,802)(159,669)16,667(206,149)213,523$(1,416,430)$1,701,7342,852,964(1,857,594)769,709163,817(46,889)(20,042)201,527(21,250)3,743,976(7,409)2,196,3081,196,908$3,393,216$ (888,663)422.590197,99972,06344,94037,72355,76526,37346,267(1,573,860)(29,595)(24,362)263,345322,20336,721442,29523,697(524,499)(1,634,850)(26,441)(12,260)$(1,673,551)$ 730,000318,972568,745106,611(203,780)(17,025)20,0001,523,523(34,278)(708,805)1,905,713$1,196,908a. As this chapter explained, many companies that report net losses on their earnings statements report positivecash flows from operating activities. How do Tesla's net incomes compare to its cash flows from operating Page 689activities?b. Based only on the information in the statements of cash flows, does Tesla appear to be growing the capacity of itsbusiness? Explain.c. In 2016, Tesla paid off $1.9 billion of &#34;convertible and other debt.&#34; Where did it get the funds to repay this debt?d. All things considered, based on the information in its statements of cash flows, does Tesla's cash position appear to beimproving or deteriorating?

Accepted Answer

Cash flow statement is an important financial statement for a company along with balance sheet and…

Review the statement of cash flows for Tesla Motors Inc. in ATC 14-1 on page 688. Discuss the cash position of the company by considering the following: Does the company’s cash flow position appear to be improving?