Tesla Debt to Equity Ratio Analysis (2024)

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Tesla Debt to Equity Ratio Analysis? ›

Tesla's debt / equity, adjusted hit its 5-year low in December 2022 of 12.9%. Tesla's debt / equity, adjusted decreased in 2019 (220.2%, -21.6%), 2020 (60.0%, -72.8%), 2021 (29.4%, -51.0%), and 2022 (12.9%, -56.3%) and increased in 2023 (15.3%, +18.9%).

Tesla's long-term liabilities include long-term debt, operating leases, deferred revenue, warranty reserve, etc. Tesla's total long-term liabilities comprised only 0.2X or 20% of its equity, a significantly low ratio.

The optimal D/E ratio varies by industry, but it should not be above a level of 2.0. A D/E ratio of 2 indicates the company derives two-thirds of its capital financing from debt and one-third from shareholder equity.

Tesla's financial leverage for fiscal years ending December 2019 to 2023 averaged 2.6x. Tesla's operated at median financial leverage of 2.1x from fiscal years ending December 2019 to 2023. Looking back at the last 5 years, Tesla's financial leverage peaked in December 2019 at 5.2x.

Automakers also need top-of-the-line research and development, which can be costly from an investment standpoint. Cobb attributes Tesla's low debts to a few different things, with the first being its sleek lineup of cars, innovative technology, and its overall dedication to renewable energy and sustainability.

Total debt on the balance sheet as of December 2023 : $9.57 B. According to Tesla's latest financial reports the company's total debt is $9.57 B. A company's total debt is the sum of all current and non-current debts.

As of 4Q 2023, Tesla's net debt was -$24.4 billion due to having more cash than debt. This figure was much larger than the one reported a year ago, indicating the company's increasing amount of cash compared to debt. In fact, Tesla has been debt-free since 3Q 2020, as shown in the chart above.

Equally, the all-important price-to-earnings-to-growth (PEG) ratio is 3.6 for TSLA. This is by no means an enticing ratio, and it infers that Tesla stock is overvalued considerably.

Wall Street expects Tesla earnings per share of just $2.96 a share in 2024, according to FactSet. That would be a around a 5% decline vs. last year's $3.12. That was a 23% decline vs. 2022. Analyst project a solid increase in 2025 to $4.13 a share.

What is Apple's debt ratio? ›

Apple Debt to Equity Ratio: 1.458 for Dec. 31, 2023

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What is a bad debt-to-equity ratio? When the ratio is more around 5, 6 or 7, that's a much higher level of debt, and the bank will pay attention to that. “It doesn't mean the company has a problem, but you have to look at why their debt load is so high,” says Lemieux.

Generally, a good debt-to-equity ratio is anything lower than 1.0. A ratio of 2.0 or higher is usually considered risky. If a debt-to-equity ratio is negative, it means that the company has more liabilities than assets—this company would be considered extremely risky.

The company has an average financial risk score of 2.61, driven by its healthy liquidity and cash flow ratios.

2020 was the first time that Tesla turned a full-year profit. Previously, net losses had begun to accelerate in 2014, and so did research and development (R&D) expenses.

Tesla long term debt for 2023 was $2.857B, a 78.9% increase from 2022. Tesla long term debt for 2022 was $1.597B, a 69.55% decline from 2021. Tesla long term debt for 2021 was $5.245B, a 45.4% decline from 2020.

The Highest Debt-To-Equity Ratios

Borrowed money is a bank's stock in trade. Banks borrow large amounts of money to loan out large amounts of money, and they typically operate with a high degree of financial leverage. D/E ratios higher than 2 are common for financial institutions.

Tesla long term debt for 2023 was $2.857B, a 78.9% increase from 2022. Tesla long term debt for 2022 was $1.597B, a 69.55% decline from 2021. Tesla long term debt for 2021 was $5.245B, a 45.4% decline from 2020.

Interpreting the Debt Ratio

If the ratio is over 1, a company has more debt than assets. If the ratio is below 1, the company has more assets than debt. Broadly speaking, ratios of 60% (0.6) or more are considered high, while ratios of 40% (0.4) or less are considered low.