Microsoft Word - case 2 - Tesla instructions FIN 4422 Case 2 – Tesla Assignment Questions 1. What is the business model of the firm? Describe the value proposition that the firm provides to its...

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Microsoft Word - case 2 - Tesla instructions FIN 4422 Case 2 – Tesla Assignment Questions 1. What is the business model of the firm? Describe the value proposition that the firm provides to its customers. Include this in your case summary. 2. Using the financial statements provided, assess the financial condition of Tesla. Include the following in your analysis:  Calculate the liquidity ratios for the firm (current ratio, quick ratio, cash ratio). What are the trends?  Calculate the asset management ratios (A/R turnover, inventory turnover, A/P turnover, net fixed asset turnover, total asset turnover) and the cash conversion cycle (CCC). What are the potential issues?  Calculate leverage ratios (debt-to-equity, debt-to-total assets, net debt-to- equity, cash/interest expense). What are the implications?  Calculate the profitability ratios (net profit margin, gross profit margin, ROE, ROA). What are the trends? What are the implications? 3. Develop a pro forma income statement and balance sheet for the years 2016, 2017, and 2018. Assumptions should be based on historical data. (We will do this in class.) 4. Using either a DCF valuation, multiple valuation, or a combination of both, determine a price target for Tesla. (We will do this in class.) 5. Based on your financial analysis and your price target, do you recommend buying shares in the new public offering? List the possible choices in the alternatives section, and list your suggestion in the recommendation section.