ACCT 220 SEC 10K Report

https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785824000031/gm-20231231.htm

Company: General Motors

Project Overview:

This project will allow you to apply the fundamental principles of accounting learned in class to a real-world scenario. You will analyze a publicly traded company’s annual report (10-K), focusing on core accounting concepts and their practical application.

Learning Objectives:

Define the fundamental principles of accounting to describe basic business transactions.

Identify basic business transactions reflected in the financial statements.

Analyze and interpret financial statements from a public company’s 10-K report.

Prepare a concise report summarizing your findings and communicate key financial information.

Project Steps:

1. Company Selection:

Choose a publicly traded company from a recognized S&P 500 or Fortune 500 index.

Ensure the company’s most recent (issued within the last 12 months) 10-K filing is accessible online through the Securities and Exchange Commission (SEC) website

https://www.sec.gov/edgar/search-and-access

or other financial portals.

Review the company’s 10-K report, focusing on the following sections:

Financial Statements: Analyze the Balance Sheet, Income Statement, Statement of Shareholder’s Equity, and Notes to the Financial Statements. Pay close attention to key financial metrics like revenue, expenses, profits, and changes on the balance sheet.

Identify examples of basic business transactions reflected in the financial statements.

The company’s profitability, liquidity, solvency, and financial position.

Any trends or concerns identified in the financial data.

3. Report Preparation:

Prepare a concise and well-organized report (approximately 3-5 pages single-spaced) addressing the following:

Company Introduction: Briefly describe the company and its industry.

Accounting Principles: Explain the fundamental accounting principles used by the company.

Identify and explain any relevant financial ratios or metrics.

Highlight any trends or concerns observed in the financial data.

Conclusion: Summarize your overall assessment of the company’s financial health and changes.

Paper Title: Up to 12 Words or Two Lines
Author First M Last
University of Maryland Global Campus
ACCT-220 Principles of Accounting I Section XXXX
Instructor Name
Due Date
Paper Title in Bold at the Top of Page 2
1. Company Introduction:
Tesla, Inc. is a leading American electric vehicle and clean energy company founded by Elon
Musk in 2003. The company operates in the automotive and energy sectors, producing electric
vehicles, battery energy storage solutions, and solar products. As of its latest financial report for
the fiscal year ending December 31, 2023, Tesla reported a total revenue of $59.3 billion,
representing a 71% increase compared to the previous year (Tesla, 2024). With a market
capitalization exceeding $1 trillion as of March 2024, Tesla is a prominent player in the
sustainable energy industry, known for its innovative technologies and forward-thinking
approach (Tesla, 2024).
2. Accounting Principles:
Tesla applies various fundamental accounting principles in its financial reporting, including
accrual basis accounting, revenue recognition principle, and historical cost principle. The
company’s adherence to these principles accurately represents its financial performance and
position. For instance, Tesla recognizes revenue from the sale of electric vehicles and energy
products when control of the goods is transferred to the customer, typically upon delivery.
Additionally, the company follows the historical cost principle in valuing its assets, ensuring
consistency and reliability in financial reporting (Tesla, 2024).
3. Financial Statement Analysis:
3.1 Balance Sheet Analysis:
Tesla’s Balance Sheet reveals a robust financial position, with total assets amounting to $167.2
billion as of December 31, 2023, a significant increase from $114.3 billion in the previous year.
The company’s current assets, including cash and cash equivalents, marketable securities, and
inventory, totaled $44.8 billion, providing ample liquidity to support its operations and growth
initiatives. Tesla’s long-term assets, such as property, plant, and equipment, amounted to $122.4
billion, reflecting investments in manufacturing facilities and research and development (Tesla,
2024).
3.2 Income Statement Analysis:
Tesla’s Income Statement demonstrates robust revenue growth, primarily driven by automotive
sales, energy generation, and storage revenues. For the fiscal year 2023, the company reported a
total revenue of $59.3 billion, with automotive revenue accounting for $53.1 billion and energy
generation and storage revenue contributing $6.2 billion. Despite significant investments in
research and development, Tesla maintained a positive net income of $5.6 billion, indicating
strong operational efficiency and profitability (Tesla, 2024).
3.3 Statement of Shareholders’ Equity Analysis:
The Statement of Shareholders’ Equity illustrates Tesla’s capital structure and shareholder
ownership changes over time. As of December 31, 2023, the company’s total shareholders’ equity
amounted to $78.9 billion, reflecting retained earnings and occasional equity issuances. Tesla
occasionally raises capital through equity offerings to fund expansion projects and strategic
initiatives. Additionally, the company’s dividend policy, although relatively modest, reflects
management’s commitment to shareholder value creation (Tesla, 2024).
3.4 Financial Ratios and Metrics:
Key financial ratios and metrics provide further insights into Tesla’s financial performance and
efficiency. The company’s liquidity ratios indicate adequate short-term solvency, with a current
ratio of 1.77 and a quick ratio of 1.20 as of December 31, 2023. Tesla’s profitability ratios,
including a gross profit margin of 22.7% and a net profit margin of 9.4%, demonstrate its ability
to generate profits from its core operations. The company’s efficiency ratios, such as inventory
turnover of 9.5 times and accounts receivable turnover of 9.8 times, highlight its effective asset
and working capital management (Tesla, 2024).
Liquidity Ratios:
Ratios
Current Ratio
Values
1.77
Quick Ratio
1.20
Profitability Ratios:
Ratios
Gross Profit Margin
Values (%)
22.7
Net Profit Margin
9.4
Efficiency Ratios:
Ratios
Inventory Turnover
Values (times)
9.5
Accounts Receivable Turnover
9.8
3.5 Trends and Concerns:
While Tesla’s financial statements demonstrate impressive growth and profitability, specific
trends and concerns warrant attention. The company’s increasing debt levels, primarily driven by
capital expenditure and expansion initiatives, raise questions about its long-term financial
sustainability. As of December 31, 2023, Tesla reported a total debt of $25.6 billion, including
short-term and long-term obligations. Additionally, Tesla’s reliance on regulatory credits for
revenue generation poses risks amid potential government policy and regulation changes, which
could impact its financial performance and profitability (Tesla, 2024).
4. Conclusion:
In conclusion, Tesla’s financial analysis highlights its position as a leader in the electric vehicle
and clean energy industry. The company’s adherence to fundamental accounting principles,
robust financial performance, and strategic investments underscore its long-term growth and
innovation potential. However, stakeholders should remain vigilant of emerging trends and
challenges to mitigate associated risks effectively. Tesla’s continued focus on innovation and
sustainability will be critical in maintaining its competitive edge and driving shareholder value in
the future.
References
Tesla. (2024). 2023 Annual Report. Retrieved from https://www.tesla.com/investor-relations
Paper Title: Up to 12 Words or Two Lines
Author First M Last
University of Maryland Global Campus
ACCT-220 Principles of Accounting I Section XXXX
Instructor Name
Due Date
Paper Title in Bold at the Top of Page 2
1. Company Introduction:
[Insert brief description of the company, including its name, industry, size, and any
relevant background information.]
2. Accounting Principles:
[Explain the fundamental accounting principles utilized by the company, including but
not limited to:
Accrual basis accounting
Matching principle
Revenue recognition principle
Historical cost principle
Going concern concept
Materiality principle
Consistency principle
Conservatism principle]
3. Financial Statement Analysis:
[]
3.1 Balance Sheet Analysis:
[Discuss key findings from the Balance Sheet, including:
Current assets and liabilities
Long-term assets and liabilities
Shareholders’ equity]
3.2 Income Statement Analysis:
[Discuss key findings from the Income Statement, including:
Revenue
Expenses
Net income]
3.3 Statement of Shareholders’ Equity Analysis:
[Discuss key findings from the Statement of Shareholders’ Equity, including:
Changes in equity
Dividends
Share issuances or buybacks]
3.4 Financial Ratios and Metrics:
[Identify and explain relevant financial ratios and metrics, such as:
Liquidity ratios (e.g., current ratio, quick ratio)
Profitability ratios (e.g., gross profit margin, net profit margin)
Solvency ratios (e.g., debt-to-equity ratio, interest coverage ratio)
Efficiency ratios (e.g., inventory turnover ratio, accounts receivable turnover ratio)]
3.5 Trends and Concerns:
[Highlight any trends or concerns observed in the financial data, such as:
Declining profitability
Increasing debt levels
Decreasing liquidity
Changes in market share]
4. Conclusion:
[Summarize the overall assessment of the company’s financial health and changes
observed during the analysis.]
References
Last Name, A. B. (Year). Article Title. Journal Title, Pages #-#. URL.
Last Name, C. D. (Year). Book Title (Edition). Publisher Name. URL.
Last Name, D. E., Last Name, F. G., Last Name, H. I. (Year). Report Title (report number).
Publisher. URL.
Last Name, J. K. (Year, Month Day). Article Title/Headline. Periodical. URL.
Organization Name. (Year, Month Day). Webpage Title. URL.
For additional information on APA Style formatting, please consult the APA Style Manual, 7th
Edition.