Cash flow analysis

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The main component in evaluating the company's financial accounts is cash flow analysis. This analysis is based on information from the consolidated cash flow statements included in Tesla and Apple's 2014 and 2015 10-k annual reports. The cash flow statements show how much money is coming in and going out of a company during a specific time period. These reports are often separated into three major sections: funding, investing, and operations.

Apple's cash flow statements for fiscal years 2013 and 2014 were $ 59,713 billion and $ 53,666 billion, respectively (Morningstar, 2016). The figures represent an increase of $ 6,047 in the cash generated by the operating activities. Apple used the indirect method to calculate this net cash from operating undertakings. The net income was adjusted for both decreases and increase in working capital and non - cash expenses on the current side of the company’s balance sheet. The operating net income in 2013 and 2014 were $ 182,795 and 170,910 respectively (Morningstar, 2016). The operating cash flow comprises of the net cash and funds from discontinued activities by the organization. The operating functions for Apple involve the creation of goods and services. The cash generated increased from 2013 to 2014. The income from operations is sufficient and therefore, an analyst may preempt that the cash is adequate and the company does not need additional income to finance its activities. The increase in the cash is used by the company to expand it is production capacity of the computers. Apple focuses on enhancing stability and performance instead of presenting new elements to its brands in the technology market. Additionally, the cash flow indicates that Apple is in position to finance it is financial obligations as and when they become due.

Financing Activities

The financing net cash flow for Apple increased from 2013 to 2014, it was valued at $16.38 b and$ 37.55 b respectively (Morningstar, 2016). The cash increased by $21.17b. The increase in the cash from the financing activities suggests that the cash and cash equivalents of the company increased. However, this figure is less low than the cash generated between 2012 and 2013.

Investing Activities

The investing cash for Apple decreased in the financial years 2013 and 2014 from $33.77 b and $22.58B respectively (Morningstar, 2016). The amount decreased by $ 11.19 b. This decrease implies the company invested heavily in the two fiscal years. Considerably, Apple purchased and leased more fixed assets like plant, property, and equipment, involved in acquisitions of intangible assets and invested in marketable securities. However, the cash inflow was generated from the sale of marketable securities and proceeds from the maturities of the marketable securities. All these activities aggregated the cash for investing activities.

Analysis of the Tesla Cash Flow Statements

Operating Activities

In the analysis of the Tesla Cash flow statements, we are going to analyze the operating activities first. These functions indicate the cash generated by the organization’s services and cost of sales less cash requires facilitating the selling of the products. Tesla cash flow activities are influenced by the company’s cash investment to enhance the development of the business such as research and development (R & D), selling, administrative and general, and manufacturing. From the 2014 and 2015 annual reports, Tesla listed it is operating c funds s cash from the customer , sale of vehicles, cash from development services, sales of power train systems and components, and sale of the regulatory credits. In contrast, the cash outflow was used for employee compensation, manufacture products, and pay interest expenses and operating leases on organization’s financing.

The operating cash flow for Tesla for the financial years 2013, 2014, and 2015 was (266.08m), 257.99 m, and 57.34 m respectively (Morningstar, 2016). The exponential increase in the operating cash between 2013 and 2014 was attributed to the overall increase in the inventory to enhance the business growth and raise the operating lease motor vehicles and Tesla also involved in a lot of research and development ( R & D ) expenses. However, the decrease in the cash between 2014 and 2015 resulted from the high increase in the finished goods and the delay of the shipment of these products for the full year and the high purchases of the raw materials to realize the pre-order demand.

Investing Activities

Investment activities are our second part to analyze in the Tesla cash flow statements. Investments are related to the capital expenditures that support organizations growth in operations. Tesla between 2013 and 2015 invested in purchase and lease of the new types of equipment for their modern vehicles model, stores, the modern infrastructure of the network that is supercharged and service stations. The cash used amounted to $ 1.67 b, 990.4 m, and 249.4 m in 2013, 2014, and 2015 respectively (Morningstar, 2016). The large decrease in investing cash from 2013 to 2014 is due to the acquisition of the large property and equipment which was used to commence the construction of the Giga factory which is located in Nevada. Considerably, Tesla plans to raise the investment expenditures to over $ 2 billion (Morningstar, 2016). Notably, this large increase in the Tesla cash outflow is considered to be alarming, however, with the fact that the funds are used to finance future investments with promising returns, and then the organization will have to wait for the investment to mature. Although many investment analysts focus on the ability of the company to reinvest their money, Tesla is not using this technique.

Financing Activities

Financing activities in the third section in our analysis of the Tesla cash flow statements. These activities include cash inflows from selling of the bonds and stocks and short and long-term loans from the financial institutions such as banks. Activities such as loan repayment purchase of inventory and dividend payments are enlisted in this section. Tesla‘s cash flow statements had $ 1.197 b, 1.905, and $ 846 million in 2013, 2014, and 2015 respectively (Morningstar, 2016). The higher cash flow in 2015 was obtained from the issuance of the common stock and sale of the vehicles to leasing partners of the bank. In contrast, the huge amount of the net proceeds received from bank notes issued out in 2014 led to the decrease in cash between 2014 and 2015.

Tesla derives large amounts of their cash from the bank notes and investors. The substantial increase in cash between 2013 and 2014 led to the decision by the company’s management to allocate more funds for the then construction of the Giga factory that commenced in the fiscal year 2014. Significantly, investors are eying on Tesla undertaking in the projects in Nevada, particularly, they are observing if Tesla will be able to independently finance their projects from their invested cash rather than borrowing. Considerably, Tesla did not pay it is dividends from their stock. Although for Tesla investing in long-term projects is considered risky, but the ventures are profitable for the company. For the investors looking for quick returns, Tesla is not their avenue for investment.

Comparisons and Contrasting of Tesla and Apple.Inc Cash Flow Statements

The two companies from the analysis of their cash flow statements in the financial year 2013, 2014 and 2015 rely heavily on external funds to fiancé their projects. Both organizations reported an increase in the operating activities for the fiscal years 2013 and 2014. The operating cash was used in the purchase and lease of the property, plant, and equipment. Additionally, Apple used cash in enhancing stability and performance instead of presenting new elements to its brands in the technology market whereas Tesla used the funds in the financing the construction of the Giga factory.

The two companies have different strategies for raising funds. Apple mainly generates cash from the sale of marketable securities and proceeds from the maturities of the marketable securities. All these activities aggregated the cash for investing activities. In contrast, Tesla main source of funds activities includes cash inflows from selling of the bonds and stocks and short and long-term loans from the financial institutions such as banks.

In summary, analysis of the cash flow statements is significant to the users of the financial statements such government, management, creditors, and investors in ascertaining the level of the organization’s cash inflow and outflow. Apple and Tesla manage their cash well by investing into future projects which would generate the revenues for the companies. Both corporations use IFRS and GAAP in preparation of their cash flow statements for accuracy and completeness to enable the beneficiaries of these statements to obtain data they may need for decision making when negotiating deals with these organizations. In my opinion, both Apple and Tesla are financially healthy and strong with exponential growth in the past financial years. I recommend that the two giant organizations need to emphasize more on their customer service and embrace product innovations.


Morningstar. (2016). Tesla and Apple Cash Flow Statements. Retrieved from

May 17, 2023

Economics Business

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