Assumptions
In the preparation of the above ProForma income statement, the following assumptions have been made;
The base year for the ProForma income statement is 2015 as presented by the data on YAHOO finance (finance.yahoo.com).
All revenues to the company will grow by 12% for the next 5 years beginning 2016.
All expenses incurred by the company will grow by 10% for the next five years beginning 2016. The growth in expenses is attributed to the growth/increase in revenues generating activities.
Income tax expense and interest expenses will grow at the same rate as all the other expenses
The company will not make significant capital investments within the period represented by the ProForma statement.
All the above assumptions have been made to help predict the possible income that will be earned by Tesla Motors for the next five years of operation.
Exit Strategy
The company’s main expenses are on research and development due to the company’s commitment to continuously improve its vehicles and stay abreast of the competition (Peltz). However, low sales and hence, low revenues has led to the company incurring losses. The exit strategy will be for the company significantly reduce its costs including expenses on research and development. The company will also have to lay out strategies that will boost sales and hence, revenues (Tom Huddleston). This will lead to improvement in profits until they turn positive.
Works Cited
finance.yahoo.com,. "TSLA Income Statement | Balance Sheet | Cash Flow | Tesla Motors, Inc. Stock - Yahoo Finance". Finance.yahoo.com. N.p., 2016. Web. 12 July 2016.
Peltz, James F. "Tesla Motors' Net Loss More Than Doubles In Fourth Quarter". latimes.com. N.p., 2016. Web. 12 July 2016.
Tom Huddleston, Jr. "Tesla Motors To Big Sales, But Widening Losses". Fortune. N.p., 2015. Web. 12 July 2016.
