Evaluating the Working Capital of Tesla Company

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Financial statements
Working capital can be described as the difference between the company's current liabilities and current assets. In addition, it is a financial measure calculated to determine whether or not the company is liquid enough to pay its current liabilities when and as they fall due within a financial year. Both current liabilities and current assets are found in the company balance sheet. The balance sheet is a snapshot of what the company or the business owns, owes and the amount that the shareholders have invested reported monthly, daily, yearly, or as per the company reporting rules(Liu,2020). Whenever the company changes the current liabilities or the current assets in response, the working capital is altered. A balance sheet report has three main parts, which are: assets, liabilities, and the shareholder capital. For example, if the company has $4000 as the current assets and $2000 as the current liability, its working capital will be $2000. Below is the working capital formula;
Working Capital = Current Assets – Current Liabilities
Both current assets and current liabilities are found in the assets and liabilities parts, respectively.
A cash flow statement being part of the financial statements provides Tesla Inc. data aggregated regarding the company's cash inflow from its external investment sources and the ongoing operations. The cash flow statement has three main sections, namely; operation, investing, and financing investments. Any changes in the company's current liabilities and current assets apart from the cash affect the operating activities cash balance. Major company projects require working capital investments, which reduces the cash flow (Leeson and Boopathi, 2016). To determine the change in working capital by use of the cash flow statements, we use the below formula;
Current operation assets-current operation liabilities=working capital
The role of working capital
The working capital should be appropriately managed since it's essential for Tesla's operational success as a whole business or the company's fundamental health. A good business management hallmark is the ability to utilize the working capital management to maintain profitability and solid balance between growth and liquidity. The working capital is used as a metric on how the company is operating and its financial stability on a short-term basis. Effective and efficient working capital management in Tesla Inc. helps maintain smooth operations and helps improve the company's profitability and earnings. Further, the main objective of a healthy working capital management is to ensure that the working capital operating cycle is maintained, the cost of the capital minimization on the working capital spent,...