Tesla, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31. 2016 2017 2015 S (2,240,578) S (773,046) (888,663) 1,636,003 466,760 91,037 131,665 105,770 52,309 57,746 135,237 947,099 334,225 94,690 65,520 34,633 (29,183) (88,727) (15,179) 422,590 197,999 78,054 44 940 37.723 55,765 20,382 Cash Flows from Operating Activities Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Stock-based compensation Amortization of debt discounts and issuance costs Inventory write-downs Loss on disposals of fixed assets Foreign currency transaction losses (gains) Loss (gain) related to SolarCity acquisition Non-cash interest and other operating activities Changes in operating assets and liabilities, net of effect of business combinations: Accounts receivable Inventories Operating lease vehicles Prepaid expenses and other current assets MyPower customer notes receivable and other assets Accounts payable and accrued liabilities Deferred revenue Customer deposits Resale value guarantee Other long-term liabilities Net cash used in operating activities Cash Flows from Investing Activities Purchases of property and equipment excluding capital leases, net of sales Maturities of short-term marketable securities Purchases of solar energy systems, leased and to be leased Increases in restricted cash Business combinations, net of cash acquired Net cash used in investing activities (24,635) (178,850) (1,522,573) (72,084) (15,453) 388,206 468,902 (216,565) (632,867) (1,832,836) 56,806 (49,353) 750,640 382,962 388,361 326,934 132,057 (123,829 46,267 (369,364) (1,204,496) (29,595) (24,362) 263,345 322,203 36,721 442,295 23.697 (524,499) 170,027 208,718 81,139 (60,654) (3,414,814) (1,634,850) (666,540 ) (223,090) (114,523 (4,418,967) (1,280,802) 16,667 (159,669) (206,149) 213,523 (1,416,430 (26,441 ) (12,260) (1,673,551) (continued on next page) Tesla, Inc. Consolidated Statements of Cash Flows (continued) (in thousands) Year Ended December 31, 2017 2016 2015 1,701,734 2,852,964 (1,857,594) 730,000 318,972 400,175 7,138,055 (3,995,484) (165,000) 511,321 259,116 (103,304) (63,111) (204,102) 287,213 52,883 769,709 163.817 (46,889 (20,042) 568,745 106,611 (203,780) (17,025) 20.000 Cash Flows from Financing Activities Proceeds from issuances of common stock in public offerings Proceeds from issuances of convertible and other debt Repayments of convertible and other debt Repayments of borrowings under Solar Bonds issued to related parties Collateralized lease borrowings Proceeds from exercises of stock options and other stock issuances Principal payments on capital leases Common stock and debt issuance costs Purchases of convertible note hedges Proceeds from settlements of convertible note hedges Proceeds from issuances of warrants Proceeds from issuance of common stock in private placement Payments for settlements of warrants Proceeds from investments by noncontrolling interests in subsidiaries Distributions paid to noncontrolling interests in subsidiaries Payments for buy-outs of noncontrolling interests in subsidiaries Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental Non-Cash Investing and Financing Activities Shares issued in connection with business combinations and assumed vested awards Acquisitions of property and equipment included in liabilities Estimated fair value of facilities under build-to-suit leases Supplemental Disclosures Cash paid during the period for interest, net of amounts capitalized Cash paid during the period for taxes, net of refunds 201,527 (21,250) (230,385) 789,704 (261,844) (373 4,414,864 39,455 (25,302) 3,393,216 3,367,914 3,743,976 (7,409 2,196,308 1,196,908 3,393,216 1,523,523 (34,278 (708,805 1,905,713 1,196,908 S S S 10,528 914,108 313,483 S 2,145,977 663,771 307,879 $ $ S 267,334 174,749 S S S S S s 182,571 65,695 38,693 16,385 32,060 9,461 S S The accompanying notes are an integral part of these consolidated financial statements. 67 Tesla, Inc. Consolidated Statements of Operations (in thousands, except per share data) Year Ended December 31, 2016 2017 2015 $ $ $ 8,534,752 1,106,548 9,641,300 1,116,266 1,001,185 11,758,751 5,589,007 761,759 6,350,766 181,394 467,972 7,000,132 3,431,587 309,386 3,740,973 14,477 290,575 4,046,025 6,724,480 708,224 7,432,704 874,538 1,229,022 9,536,264 2,222,487 4,268,087 481,994 4,750,081 178,332 472,462 5,400,875 1,599,257 2,639,926 183,376 2,823,302 12,287 286,933 3,122,522 923,503 Revenues Automotive sales Automotive leasing Total automotive revenues Energy generation and storage Services and other Total revenues Cost of revenues Automotive sales Automotive leasing Total automotive cost of revenues Energy generation and storage Services and other Total cost of revenues Gross profit Operating expenses Research and development Selling, general and administrative Total operating expenses Loss from operations Interest income Interest expense Other (expense) income, net Loss before income taxes Provision for income taxes Net loss Net loss attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries Net loss attributable to common stockholders Net loss per share of common stock attributable to common stockholders Basic Diluted Weighted average shares used in computing net loss per share of common stock Basic Diluted 1,378,073 2,476,500 3,854,573 (1,632,086) 19,686 (471,259) (125,373) (2,209,032) 31,546 (2,240,578) 834,408 1,432,189 2,266,597 (667,340 8,530 (198,810) 111,272 (746,348) 26,698 (773,046) 717,900 922,232 1,640,132 (716,629) 1,508 (118,851) (41,652 (875,624) 13,039 (888,663) (279,178 (1,961,400 (98,132 (674,914 (888,663 $ (11.83 (11.83 (4.68 (4.68 (6.93 (6.93 $ $ 165,758 165,758 144,212 144,212 128,202 128,202 The accompanying notes are an integral part of these consolidated financial statements. Tesla, Inc. Consolidated Balance Sheets (in thousands, except per share data) December 31, 2017 December 31, 2016 3,393,216 105,519 499,142 2,067,454 194,465 3,367,914 155,323 515,381 2,263,537 268,365 6,570,520 4,116,604 6,347,490 10,027,522 361,502 615 60,237 456,652 441,722 273,123 28,655,372 6,259,796 3,134,080 5,919,880 5,982,957 376,145 506,302 268,165 216,751 22,664,076 Assets Current assets Cash and cash equivalents Restricted cash Accounts receivable, net Inventory Prepaid expenses and other current assets Total current assets Operating lease vehicles, net Solar energy systems, leased and to be leased, net Property, plant and equipment, net Intangible assets, net Goodwill My Power customer notes receivable, net of current portion Restricted cash, net of current portion Other assets Total assets Liabilities Current liabilities Accounts payable Accrued liabilities and other Deferred revenue Resale value guarantees Customer deposits Current portion of long-term debt and capital leases Current portion of solar bonds and promissory notes issued to related parties Total current liabilities Long-term debt and capital leases, net of current portion Solar bonds issued to related parties, net of current portion Convertible senior notes issued to related parties Deferred revenue, net of current portion Resale value guarantees, net of current portion Other long-term liabilities Total liabilities Commitments and contingencies (Note 17) Redeemable noncontrolling interests in subsidiaries Convertible senior notes (Note 13) Equity Stockholders' equity Preferred stock; $0.001 par value; 100,000 shares authorized; no shares issued and outstanding Common stock; $0.001 par value; 2,000,000 shares authorized; 168,797 and 161,561 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively Additional paid-in capital Accumulated other comprehensive gain (loss) Accumulated deficit Total stockholders' equity Noncontrolling interests subsidiaries Total liabilities and equity 1.860,341 1,210,028 763,126 179,504 663,859 984,211 165,936 2,390,250 1,731,366 1,015,253 787,333 853,919 796,549 100,000 7,674,670 9,415,700 100 2,519 1,177,799 2,309,222 2,442,970 23,022,980 5,827,005 5,860,049 99,164 10,287 851,790 2,210,423 1,891,449 16,750,167 397,734 70 367,039 8,784 169 9,178,024 33,348 (4,974,299) 4,237,242 997,346 28,655,372 161 7,773,727 (23,740) (2,997,237) 4,752,911 785,175 22.664,076 The accompanying notes are an integral part of these consolidated financial statements. Tesla Motors, Inc. Consolidated Balance Sheets (in thousands) December 31, 2015 December 31, 2014 S Assets Current assets Cash and cash equivalents Restricted cash and marketable securities Accounts receivable Inventory Prepaid expenses and other current assets Total current assets Operating lease vehicles, net Property, plant and equipment, net Restricted cash Other assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Deferred revenue Resale value guarantees Customer deposits Long-term debt and capital leases Total current liabilities 1,196,908 22,628 168,965 1,277,838 125,229 2,791,568 1,791,403 3,403,334 31,522 74,633 8,092,460 1,905,713 17,947 226,604 953,675 76,134 3,180,073 766,744 1,829,267 11,374 43,209 5,830,667 S $ $ 777,946 268,883 191,651 916,148 422,798 423,961 136,831 283,370 633,166 2,816,274 257,587 611,099 2,107,166 Deferred revenue Long-term debt and capital leases Resale value guarantee Other long-term liabilities Total liabilities 446,105 2,040,375 1,293,741 364,976 6,961,471 292,271 1,818,785 487,879 154,660 4,860,761 42,045 58,196 Convertible senior notes (Notes 8) Stockholders' equity: Preferred stock; $0.001 par value; 100,000 shares authorized; no shares issued and outstanding Common stock; $0.001 par value; 2,000,000 shares authorized as of December 31, 2015 and 2014, respectively; 131,425 and 125,688 shares issued and outstanding as of December 31, 2015 and 2014, respectively Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity 131 3,414,692 (3,556) (2,322,323) 1,088,944 8,092,460 126 2,345,266 (22) (1,433,660 911,710 5,830,667 $ $ The accompanying notes are an integral part of these consolidated financial statements. Tesla, Inc. is a U.S. electric vehicle and clean energy company specializing in electric vehicle manufacturing, battery energy storage from home to grid scale, and solar panel and solar roof tile manufacturing. You are provided a supplementary document containing extracts from the company's 2017 and 2015 annual reports. Refer to the information in the supplementary document and below in answering this question. If you like, you can answer this question in terms of shorter-form approximate figures as follows: e.g., simply use $28,655 (which is in millions) to represent $28,655,372 (which is in thousands) of Total assets reported in the 2017 balance sheet. Marks will not be deducted for rounding errors due to such approximation adopted consistently throughout your answer. Required: i. Prepare a abular computation of the following ratios for 2017 and 2016 a. Fixed asset turnover b. Inventory turnover c. Days of inventory on hand d. Receivables turnover e. Days of receivables outstanding f. Payables turnover g. Days of payables outstanding h. Cash conversion cycle (CCC) i. Gross profit margin j. Net profit margin k. Asset turnover I. Return on assets m. Financial leverage n. Return on equity (ROE) [15 marks] ii. Discuss the change in the CCC and the change in the ROE based on the ratios computed above. [10 marks]