Tesla Motors Financal Stragegy

Automobile Company Headed for a Long Road of Success

Environmentally conscious, Tesla Motors (TSLA) had new entrance into the stock market on June 29, 2010. Headquarters in Palo Alto, California, Tesla Motors was founded in 2003 by a group of audacious Silicon Valley engineers who set out to prove that electric vehicles could be prosperous. With their ever so popular Model-S starting at a mere $49,000 (base model), Tesla plans to increase the number and variety of electric cars available to mainstream consumers. Tesla Motors is going to be the next big wave of oil free, environmentally friendly transportation – in style! Talk about risk, Tesla Motors is a company who really put it out for consumers who realize being environmentally conscious needs to happen now. Seeing Tesla Motors as my biggest stock market portfolio gain while others were up and down, I understand the dynamics of how a changing economy can affect the diversity of any single organization.

It would be nice to not have any accounts owe outstanding balances – or receive the cost of product before the transaction transpires. With purchases that are such high cost to the company, there are ways to avoid write-offs. Tesla’s accounts receivable primarily includes amounts related to sales of powertrain components and the performance of powertrain development services (Tesla, 2010). In circumstances where Tesla Motors is aware of a specific customer’s inability to meet its financial obligations, allowances against amounts receivable is permitted to reduce the net recognized receivable to the amount reasonably believes to be collected. Buyers typically do not carry accounts receivable related to vehicle and related sales as customer payments are due prior to vehicle delivery. This concept seems quite simple, lower the accounts receivable to increase cash and decrease risk.

Financial instruments that are potentially subject to a concentration of credit risk consist of cash, cash equivalents...