Tesla Inc. (NASDAQ:TSLA)

Inventory Turnover

The inventory turnover ratio experienced fluctuations over the period. Starting at 6.07 in 2020, it increased to a peak of 6.99 in 2021, declined significantly to 4.72 in 2022, and then recovered in subsequent years to reach 6.68 by the end of 2024. This indicates variability in inventory management efficiency, with improvements observed in the most recent years.

Receivables Turnover

Receivables turnover showed a marked increase from 16.72 in 2020 to a peak of 28.14 in 2021, maintaining relatively high levels in 2022 and 2023 around 27.6 and 27.59 respectively, before decreasing to 22.11 in 2024. This suggests enhanced collection efficiency initially, followed by some decline in the latest year, though still better than the starting point.

Payables Turnover

Payables turnover remained relatively stable around 4.0 from 2020 through 2022 but then increased notably to 5.48 in 2023 and 6.43 in 2024, indicating faster payment to suppliers in recent years, which might impact cash management practices.

Working Capital Turnover

Working capital turnover showed a strong increase from 2.53 in 2020 to 7.28 in 2021, followed by a steady decline over the subsequent years to 3.31 in 2024. The initial improvement implies more efficient utilization of working capital, although the trend reversed, indicating potential inefficiencies or increased capital requirements later.

Average Inventory Processing Period

The inventory processing period decreased from 60 days in 2020 to 52 days in 2021, then increased sharply to 77 days in 2022 before declining again to 55 days in 2024. The increase in 2022 points to slower inventory movement that year, with recovery observed afterwards.

Average Receivable Collection Period

This metric improved significantly from 22 days in 2020 to 13 days in 2021 and remained stable through 2023, before increasing slightly to 17 days in 2024. The performance suggests faster collection cycles initially, with a marginal slowdown more recently.

Operating Cycle

The operating cycle shortened from 82 days in 2020 to 65 days in 2021, then extended to 90 days in 2022, followed by a decrease to 72 days by 2024. This pattern aligns with changes in inventory and receivables processing periods, reflecting variable efficiency in managing the overall operating cycle.

Average Payables Payment Period

The payables payment period remained quite stable near 89-92 days from 2020 through 2022, then shortened notably to 57 days by 2024. This indicates an acceleration in paying suppliers in recent years, which may affect liquidity.

Cash Conversion Cycle

The cash conversion cycle stayed negative or near zero through 2022 (-7 to -2 days), suggesting efficient cash flow management whereby payables are extended longer than the sum of inventory and receivables periods. However, this cycle turned positive in 2023 and increased further to 15 days in 2024, signaling a shift toward longer cash tied up in operations, potentially affecting liquidity.

The analysis of the annual financial data reveals several key trends regarding cost of revenues, inventory levels, and inventory turnover ratios over the five-year period under review.

Cost of Revenues

There is a consistent and significant increase in the cost of revenues from 2020 through 2024. Starting at $24,906 million in 2020, it rises to $40,217 million in 2021, representing strong growth, and continues to climb sharply to $60,609 million by 2022. The upward trend persists into 2023 and 2024 with figures reaching $79,113 million and $80,240 million respectively. This upward trend indicates expanding production or sales volume, higher input costs, or a combination of factors increasing the cost of goods sold.

Inventory Levels

Inventory values also show an overall upward movement with some variation. From $4,101 million in 2020, inventory increases to $5,757 million in 2021, and then shows a more pronounced growth, peaking at $13,626 million in 2023. However, there is a slight decrease in 2024, dropping to $12,017 million. This pattern suggests that the company has been gradually building inventory, possibly in anticipation of higher sales or in response to supply chain considerations. The decrease in 2024 could reflect efforts to better manage inventory or changes in demand dynamics.

Inventory Turnover Ratio

The inventory turnover ratio, which measures how many times inventory is sold and replaced over a period, shows variability over the years. It improves from 6.07 in 2020 to 6.99 in 2021, indicating more efficient inventory management or faster sales. However, a decline to 4.72 occurs in 2022, which may indicate slower sales or increased inventory accumulation. The ratio recovers to 5.81 in 2023 and further increases to 6.68 in 2024, moving back towards higher efficiency levels seen in earlier years. This fluctuation highlights possible operational adjustments or changes in market demand affecting inventory management.

The financial data over the five-year period reveals significant trends in revenues, accounts receivable, and receivables turnover ratio.

Revenues

There is a consistent upward trajectory in revenues from 2020 through 2024. The revenues increased from approximately $31.5 billion in 2020 to nearly $97.7 billion in 2024. The most substantial growth occurred between 2020 and 2022, where revenues more than doubled from $31.5 billion to $81.5 billion. After 2022, growth continued but at a slower rate, showing a plateau in the latter years, with an increase of about 1% from 2023 to 2024.

Accounts Receivable, Net

The accounts receivable show an increasing trend over the same period, rising from $1.886 billion in 2020 to $4.418 billion in 2024. The growth in receivables is steady and generally mirrors the rise in revenues, indicating an expanding business scale. The increase in accounts receivable suggests a higher volume of credit sales or longer collection periods.

Receivables Turnover Ratio

This ratio measures how efficiently the company collects its receivables. The ratio increased sharply from 16.72 in 2020 to a peak of 28.14 in 2021, indicating improved collection efficiency or faster turnover of receivables. The ratio remained relatively stable around 27.6 in 2022 and 2023. However, there is a noticeable decline to 22.11 in 2024, signaling a slowdown in receivables collection efficiency or a longer receivables cycle, which could warrant attention for cash flow management.

Overall, the data shows a strong revenue growth accompanied by rising accounts receivable balances. The receivables turnover improved initially but declined in the latest year, suggesting potential changes in credit policy or customer payment behavior that could impact liquidity.

Cost of Revenues

The cost of revenues has demonstrated a consistent upward trend over the observed periods. Starting at $24,906 million in 2020, it increased significantly each subsequent year, reaching $80,240 million by 2024. The most notable rise occurred between 2021 and 2023, with an increase of nearly $38,000 million over these three years. The growth rate slowed somewhat from 2023 to 2024, indicating a possible stabilization in this expense component.

Accounts Payable

Accounts payable also increased from $6,051 million in 2020 to a peak of $15,255 million in 2022. However, from that peak, a decline occurred in the following years, dropping to $12,474 million by the end of 2024. This decline after 2022 suggests improved management of liabilities or changes in purchasing or payment strategies, possibly reflecting better negotiation terms or reduced reliance on credit from suppliers.

Payables Turnover Ratio

The payables turnover ratio, which measures how many times the company pays off its accounts payable during the year, remained relatively stable around 4.0 from 2020 to 2022. A sharp increase was observed starting 2023, with the ratio rising to 5.48 and further to 6.43 in 2024. This increase indicates a faster payment cycle, suggesting enhanced efficiency in managing payables and possibly an improved liquidity position or stronger supplier relationships allowing quicker settlements.

The financial data reveals several key trends regarding the company's working capital, revenues, and working capital turnover over a five-year period ending in 2024.

Working Capital

Working capital shows a fluctuating but overall strong upward trajectory. Starting at 12,469 million US dollars in 2020, it decreased notably in 2021 to 7,395 million US dollars. However, the following years display significant recovery and growth, reaching 14,208 million in 2022, 20,868 million in 2023, and peaking at 29,539 million in 2024. This upward trend from 2021 onwards indicates improved liquidity and possibly enhanced operational efficiency or asset management.

Revenues

Revenues demonstrate consistent and substantial growth each year. Revenues increased from 31,536 million US dollars in 2020 to nearly 97,690 million US dollars in 2024. The most significant jump occurred between 2020 and 2021 with a growth of over 70%, followed by continued strong increases through 2023. The revenue growth slowed markedly in 2024, showing only a slight increase from the prior year, implying a potential plateauing in the business expansion or market demand.

Working Capital Turnover

The working capital turnover ratio exhibits a notable decline after 2021. Starting at 2.53 in 2020, it surged to 7.28 in 2021, indicating more efficient use of working capital to generate revenues during that period. Following this peak, the ratio declined progressively to 5.73 in 2022, 4.64 in 2023, and 3.31 in 2024. This trend suggests that although working capital and revenues increased, working capital was growing faster relative to revenues after 2021, which might reflect a change in operational dynamics or increased investment in working capital components such as inventory or accounts receivable.

In summary, the company experienced rapid revenue growth alongside similar growth in working capital, with an initial increase and subsequent decline in working capital turnover ratio. The latter may warrant further analysis to understand the operational factors influencing capital efficiency despite expanding revenues.

The inventory turnover ratio exhibits a fluctuating trend over the five-year period. Initially, it rises from 6.07 in 2020 to a peak of 6.99 in 2021, indicating improved efficiency in managing and selling inventory. However, in 2022, the ratio declines significantly to 4.72, suggesting a slowdown in inventory movement. Following this dip, there is a recovery trend with the ratio increasing to 5.81 in 2023 and further to 6.68 in 2024, approaching the higher turnover levels seen earlier.

The average inventory processing period mirrors the inverse of the turnover ratio, showing days taken to process inventory. It decreases from 60 days in 2020 to 52 days in 2021, confirming improved inventory management and quicker turnover. In 2022, the period extends considerably to 77 days, consistent with the reduced turnover ratio during that year. The processing period then shortens again to 63 days in 2023 and 55 days in 2024, indicating a renewed acceleration in inventory handling.

Inventory Management Efficiency

The data reflects variable efficiency in inventory management, with 2022 being a notable year of reduced turnover and longer holding periods. The subsequent recovery suggests corrective actions or changes in sales dynamics, production schedules, or supply chain management.

Operational Implications

The extension in inventory processing time in 2022 may have tied up working capital and increased carrying costs, whereas the improvements in the following years likely optimized resource utilization and supported better cash flow.

Overall Trends

The pattern illustrates a cyclical nature in inventory management performance, with initial improvements, a mid-period setback, and a strong recovery phase. Monitoring these metrics continuously will be critical to sustain operational efficiency and financial health.

Receivables Turnover Ratio

The receivables turnover ratio displayed a strong upward trend from 16.72 in 2020 to a peak of 28.14 in 2021, indicating a significant improvement in the efficiency of accounts receivable collection. This elevated level was largely maintained in the subsequent years, with slight decreases to 27.6 in 2022 and 27.59 in 2023. However, in 2024, the ratio declined noticeably to 22.11, suggesting a reduction in the speed at which receivables were collected relative to sales.

Average Receivable Collection Period

Correspondingly, the average receivable collection period declined sharply from 22 days in 2020 to 13 days in 2021, demonstrating enhanced collection efficiency. This shortened collection period remained stable at 13 days through 2022 and 2023. A reversal occurred in 2024, with the collection period increasing to 17 days, signaling a softening in collection efficiency and potentially lengthier credit terms or slower payments.

Overall Analysis

The data reflects an initial improvement in receivables management between 2020 and 2021, characterized by faster turnover and shorter collection periods. This efficiency was sustained through 2023, indicating stable receivables performance. The downturn in 2024, as evidenced by the decreased turnover ratio and increased collection days, may indicate emerging challenges in receivables collection or changes in credit policies and customer payment behavior that merit further investigation.

Average Inventory Processing Period

This metric experienced fluctuations over the five-year period. The value decreased from 60 days in 2020 to 52 days in 2021, indicating improved inventory turnover efficiency. However, it increased significantly to 77 days in 2022, suggesting slower inventory movement. The subsequent years saw reductions to 63 days in 2023 and further to 55 days in 2024, reflecting a trend of recovery and enhanced inventory management towards the end of the period.

Average Receivable Collection Period

The receivable collection period showed a notable improvement from 22 days in 2020 to 13 days in 2021, maintaining stability at 13 days through 2023. In 2024, the period increased slightly to 17 days, representing a minor decline in the efficiency of collecting receivables but still maintaining a relatively short collection cycle compared to the initial data.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, followed a pattern similar to the inventory processing period. It decreased from 82 days in 2020 to 65 days in 2021, indicating enhanced overall operational efficiency. A sharp increase to 90 days occurred in 2022, suggesting operational delays or inefficiencies. This was followed by improvements to 76 days in 2023 and 72 days in 2024, indicating resumed operational progress and better asset utilization.

Overall Analysis

The data suggests variability in operational efficiency over the five years, with 2021 representing a peak in efficiency for inventory and receivables management. The year 2022 marked a downturn with lengthened processing and operating cycles, possibly reflecting external challenges or internal disruptions. The subsequent gains in 2023 and 2024 demonstrate a positive trend towards restoring efficient working capital management and operational cycle control.

Payables Turnover

The payables turnover ratio exhibited a slight decline from 4.12 in 2020 to 3.97 in 2022, indicating a gradual decrease in the frequency at which payables were paid during this period. However, this trend reversed significantly in 2023, with the ratio increasing sharply to 5.48 and continuing to rise to 6.43 in 2024. This substantial increase suggests an accelerated rate of payment to suppliers in the later years.

Average Payables Payment Period

The average payables payment period followed an inverse pattern to the payables turnover. It increased modestly from 89 days in 2020 to 92 days in 2022, reflecting a lengthening of the time taken to settle payables. Subsequently, there was a marked reduction in the payment period, dropping to 67 days in 2023 and further to 57 days in 2024. This decrease indicates that the company shortened the time it takes to pay its suppliers, aligning with the increased payables turnover ratio.

Overall Analysis

The data reveal a shift in the company's payables management strategy over the five-year period. The initial years show a tendency toward slower payments to suppliers, while the last two years demonstrate a strategic move towards quicker settlement of payables. This change could be indicative of improved liquidity, changes in supplier negotiation terms, or a strategic decision to enhance supplier relationships by accelerating payments.

Average Inventory Processing Period

The average inventory processing period exhibited fluctuations over the analyzed years. Starting at 60 days in 2020, it decreased to 52 days in 2021, indicating improved inventory turnover. However, it then increased significantly to 77 days in 2022, suggesting slower inventory movement during that year. Subsequently, the period decreased steadily to 63 days in 2023 and further to 55 days in 2024, reflecting a partial recovery towards faster inventory processing.

Average Receivable Collection Period

This metric showed an improvement from 22 days in 2020 to a stable 13 days from 2021 through 2023, suggesting enhanced efficiency in collecting receivables. In 2024, there was a slight increase to 17 days, indicating a minor slowdown in collections but still maintaining relatively prompt receivable turnover compared to 2020.

Average Payables Payment Period

The average payables payment period remained relatively stable at around 89 to 92 days from 2020 through 2022. However, a considerable decrease occurred in 2023, dropping the period to 67 days, and further to 57 days in 2024. This signifies a trend toward faster payments to suppliers, which may have implications for supplier relationships and cash flow management.

Cash Conversion Cycle

The cash conversion cycle (CCC) values indicate an overall lengthening trend. Initially negative at -7 days in 2020 and further decreasing to -26 days in 2021, this suggested that the company converted its inputs to cash quite rapidly, even before paying suppliers. However, the CCC increased to -2 days in 2022, then turned positive, reaching 9 days in 2023 and 15 days in 2024. The changing CCC from negative to positive values indicates a growing lag between cash outflows and inflows, possibly influenced by the lengthening inventory period in 2022 and shortened payables payment period in later years.