Detailed analysis of the financial performance of Tesla and NIO

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[...] Credit analysis We can also do a credit risk analysis through a multitude of ratios. When it comes to Tesla, we can see that most indicators are in the green. First, in 2020, its net debt went into negative territory, which means that for the first time the company has more cash than debt, which is a good sign regarding its liquidity. Second, we can see that leverage has decreased between 2018 and 2020 due to an increase in the value of equity, while the level of debt has remained stable. [...]

[...] The decrease in these expenses can be seen as a good sign in the sense that they are, in general, expenses that are difficult to retract. These economies of scale also go hand in hand with its strategy to produce particular models that are cheaper than the competition. With these economies of scale, the company will be able to offer cheaper models and gain market share. On the other hand, we can see that there has also been a decrease in research and development expenditure, which translates into an increase in revenue in the short term. [...]

[...] Detailed analysis of the financial performance of Tesla and NIO In this document, we will perform an analysis of two electric car manufacturers, Tesla and NIO. We will be able to compare their models, their strategy but above all their performance. Introduction Business activity Tesla and NIO are companies that design, build and market vehicles. They are therefore involved in research and development, design and innovation, software development for car design and sales and marketing for commercialization. Finally, they both offer repair services and electric charging stations for their vehicles. [...]

[...] We can also compare the performance of the two companies according to several multiples. Here is a table summarizing the current multiple and the forward for Tesla. Current multiple Forward - 1 year Forward - 2 year Forward - 3 year EV/EBITDA EV/EBIT P/E P/S P/Book value The EV/EBITDA and EV/EBIT ratios are likely to decrease over time due to an increasing estimate of the value of EBITDA and EBIT in future years. The decreases in these ratios are good signs because they mean that Tesla's revenues are expected to increase in the coming years. [...]

[...] The latter, once broken down, allows us to analyze what could improve the company's performance. Here are the tables summarizing the ROE for Tesla and NIO for the years 2020 and 2019 and the ROE breakdowns. Ratio Tesla ROE 4,78% -15,08% ROA 1,60% Financial Leverage Net Profit Margin 2,19% Asset Turnover ROE decomposition (traditional approach) ROE = ROA x Financial Leverage 4,78% -15,08% ROE = Net Profit Margin x Asset Turnover x Financial Leverage 4,78% -15,08% Ratio NIO ROE -53,77% -4247,92% ROA -16,21% -68,29% Financial Leverage Net Profit Margin -34,51% -145,86% Asset Turnover ROE decomposition (traditional approach) ROE = ROA x Financial Leverage -53,77% -4247,92% ROE = Net Profit Margin x Asset Turnover x Financial Leverage -53,77% -4247,92% Performance over the past three years We can analyze the performance of both companies over the last three years. [...]