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  • dh239 replied to the topic Discussion Topic: Exercise your research skills in the forum Business 101 7 years, 6 months ago

    Using data published by the Wall Street Journal on Tesla Inc. (TSLA) I have found the following metrics to be very interesting.

    Earnings per share: -4.68
    Gross Margin: +22.48
    Operating Margin: -9.86
    ROA: -4.39
    ROE: -23.11
    ROI: -8.7
    Revenue: 2.79 B
    Revenue Growth: +119.65%

    Based on the metrics, one would be alarmed by the negative ROI, ROA, and ROE. The numbers indicate that Tesla is not a healthy company and that it has a return on equity that is far under the healthy/strong range of 9-12%. However, it is also known that Tesla is investing heavily in new technologies and is set to profit in the future from these investments. For this reason, it is not entirely possible to determine the health of the company from the most popular metrics (ROE, ROI).

    Even with the unsettling metrics, investors have confidence in Tesla as a car manufacturer and technological pioneer. Tesla has shown growth in sales and revenue compared to past quarters, although growth has slowed tremendously since the company first started. I would determine the health of the company to be good, perhaps closer to fair. This is based largely on the fact that Tesla is currently a newer company with a large number of investments and not a company that has established itself fully to be judged solely on traditional metrics.