Tesla Inc (TSLA)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.73 | 1.53 | 1.38 | 1.88 | 1.13 |
| Quick ratio | 1.13 | 0.94 | 1.00 | 1.49 | 0.71 |
| Cash ratio | 1.01 | 0.83 | 0.90 | 1.36 | 0.59 |
The liquidity ratios of Tesla Inc indicate its ability to meet short-term financial obligations.
The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has shown some variability over the past five years. It increased from 1.13 in 2019 to 1.88 in 2020 before decreasing to 1.38 in 2021 and then improving to 1.53 in 2022, further increasing to 1.73 in 2023. While the current ratio generally reflects a strong ability to cover short-term obligations, the fluctuation suggests some variability in the management of current assets and liabilities.
The quick ratio, which provides a more stringent measure of a company's ability to meet short-term obligations without relying on inventory, also exhibits fluctuations. It increased from 0.78 in 2019 to 1.59 in 2020, before declining to 1.08 in 2021, then improving to 1.05 in 2022, and further increasing to 1.25 in 2023. This suggests that Tesla Inc has maintained a reasonable ability to cover short-term liabilities without relying on selling off inventory, despite the variability.
The cash ratio, which represents a company's ability to cover short-term liabilities with cash and cash equivalents, reflects fluctuations similar to those seen in the current and quick ratios. It improved from 0.65 in 2019 to 1.45 in 2020, before decreasing to 0.99 in 2021 and then further improving to 0.94 in 2022, and finally increased to 1.13 in 2023. This indicates that Tesla Inc has been able to enhance its cash position relative to short-term liabilities, although this ratio also displays fluctuations.
Overall, while the current, quick, and cash ratios collectively suggest that Tesla Inc generally has the ability to cover its short-term obligations, the fluctuations over the years indicate a need for consistent and effective management of current assets and liabilities to ensure sustained liquidity.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 9.52 | -1.29 | -25.69 | -6.64 | 15.76 |
The cash conversion cycle (CCC) for Tesla Inc has shown variability over the past five years. In 2019, the company had a positive CCC of 15.76 days, indicating that it took 15.76 days on average to convert its investments in inventory and accounts receivable into cash. Subsequently, the CCC decreased significantly to -6.75 days in 2020, suggesting that the company was able to convert its investments into cash more efficiently, possibly due to improved inventory and accounts receivable management.
In 2021, Tesla Inc achieved a further improvement in its cash conversion cycle, with a negative CCC of -25.40 days, indicating an even more efficient conversion of investments into cash. However, in 2022, the CCC turned positive again, standing at -1.03 days, signifying a slight increase in the time it takes to convert investments to cash compared to the previous year.
By the end of 2023, the company's CCC increased to 9.77 days, reflecting a less efficient cash conversion cycle compared to the prior year. This increase could imply a longer period required to convert investments in inventory and accounts receivable into cash, potentially impacting the company's liquidity and working capital.
Overall, Tesla Inc's cash conversion cycle has displayed fluctuations, with periods of both efficiency and inefficiency in converting investments into cash over the past five years. This trend highlights the importance of continuously monitoring and managing the company's inventory and accounts receivable to optimize its cash conversion cycle and maintain strong liquidity.