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Microsoft Word - Arcimoto Project Analysis.docx 1 Mashel Alfawaz ACCT 5313-N Term Project December 16, 2020 Arcimoto, Inc. Project Analysis Arcimoto is a company of electric vehicles. It was founded by Mark Frohnmayer in November of 2007. The Arcimoto headquarters are based in Eugene, Oregon. The current market capitalization of Arcimoto is 455.698 million. This is considered a medium-sized market capitalization. According to its website, Arcimoto’s mission is to “catalyze the shift to a sustainable transportation system” to emit carbon emissions.1 They have a focus on producing small electric vehicles with technological advancements to target a maximized efficiency. This is achieved by leaving behind polluted vehicles for electric vehicles that use solar power and renewable energy to recharge. This will be beneficial to the economy as it will save many lives and reduce traffic size, eliminate pollution, and will cost low. The purpose of this paper to analyze the company’s goals, performance, and implementation for the years 2017 and 2018. Arcimoto reflects its performance, future, and expected implementation in its annual report. They are still new and considered to be at the beginning of their career path as a company. They have a sole source for their parts from their suppliers, whom they have experienced a delay and continue to experience a delay throughout 2018. This recurring operation problem is an issue because it can lead to a significant loss in production and can negatively impact the overall results of the operations. They constantly strive to improve their manufacturing process and designs for their vehicles. The manufacturing process of their first two series of vehicles took longer than expected due to getting the fit of the body parts accurately 1 “Our Mission: Ultra Efficient Electric Vehicles,” Arcimoto, July 2, 2020, https://www.arcimoto.com/mission. 2 and correctly. They are constantly using new knowledge to modify things to make it to the best of their ability. They optimized their time in processes to finalize their vehicles at an efficient level of production. They did not want to rush things because it will cause further implications in the future. They have been continuously embracing constant improvements that can be made. Arcimoto’s deficient performance has been analyzed according to the corporation’s income statement, statement of equity, and balance sheet. Operating expenses grew from the end of 2017 to the end of 2018 by 229%. This was due to their initial transformation into a manufacturing corporation. In 2017, they began with only 34 employees which increased by 106% in the following year to end with 70 employees. Within the year, they transferred from a 5,000 square foot facility into a 32,000 square foot facility. That being the case, they faced higher associated with employee salaries, larger facility, R&D, production, marketing, implementation systems, and investor relations. They are expecting general costs and administration costs to continue to increase as they are still at the beginning of a manufacturing career. In 2017, they received a revenue of $127,016 which is higher than in revenue in 2018 of $94,996. This is due to receiving grant revenue in 2017 and not in 2018. They had major R&D projects occurring in 2018 to redesign their vehicle for their mass production in the future, which resulted in a 163% increase in research and development expenses. Arcimoto incurred higher sales and marketing expenses from 2017 to 2018 due to the increase in marketing their company during the year. They also faced an increase in general and administrative expenses in the year due to the larger facility, more employees, and operations. They incurred higher interest expenses from 2017 to 2018, due to higher equipment financing. After analyzing their performance within the year, Arcimoto established goals they would like to achieve in the short-term and the long-term. It became clear what the corporation should 3 expect in the following years. Arcimoto expects to receive higher liquidity and make fewer investments in the future. With the current projected cash flow from operations and current cash, they anticipate higher liquidity in the first quarter of the new year. They have made large investments in capital expenditures and believe they are set until they raise their productions significantly. They have a goal to balance their cash flows from operating activities in the future. They would like to obtain higher cash inflows and lower cash outflows. In 2017, they had a target of completing 17 new vehicles testing during the following year. This was implemented successfully as they started the following year by completing 11 out of these 17 new vehicle tastings in the first quarter of the year. They have another goal of the desire to successfully raise additional capital to cover the expenses of their enduring operations, or else they will not be able to continue their processes. They also have a goal of obtaining a commitment of capital efficiency in their operations. They would like to reach a point where they can depend on multiple sources as their suppliers. This is because their operations will not be delayed if the sole source delays delivery. According to Arcimoto’s income statement, statement of equity, and balance sheet it can be concluded that the company did not achieve positive earnings and cash inflows. This is important as it raised the concern of not being able to continue its operations and not being able to increase profits. Especially since they can experience lower than expected market acceptance of Arcimoto’s vehicles. Taking into consideration this analysis, it is also important to expect unforeseen events. This could either positively affect the company or negatively affect the company’s operations. 4 References “Arcimoto, Inc. (FUV) Stock Price, News, Quote & History.” Yahoo! Finance. Yahoo!, December 17, 2020. https://finance.yahoo.com/quote/FUV?p=FUV. “Arcimoto - 2018 Annual Report.” Arcimoto, March 29, 2019. https://www.arcimoto.com/wp-content/uploads/page/annual-meeting- materials/NC10000795_Print_10KArcimoto_E-bookproof_v1.pdf. “Our Mission: Ultra Efficient Electric Vehicles.” Arcimoto, July 2, 2020. https://www.arcimoto.com/mission.