Tesla Motors Company, Inc., began operations in 2003 but did not begin selling its stock to the public until June 28, 2010. It has lost money every year it has been in existence, and by December 31, 2013, it had total lifetime losses of approximately $1.1 billion. The company makes the Tesla Model S, and it supplies electric car components to Daimler and Toyota. Tesla€™s statements of cash flows for 2011, 2012, and 2013 follow.

Required
a. As this chapter explained, many companies that report net losses on their earnings statements report positive cash flows from operating activities. How do Tesla€™s net incomes compare to its cash flows from operating activities?
b. Based only on the information in the statements of cash flows, does Tesla appear to be growing the capacity of its business? Explain.
c. In 2013 Tesla paid off $12.7 million of long-term borrowings and $2.8 million of capital leases and other debt. Where did it get the funds to repay this debt?
d. All things considered, based on the information in its statements of cash flows, does Tesla€™s cash position appear to be improving or deteriorating?

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TESLA MOTORS, INC Consolidated Statements of Cash Flows (in thousands) For the Years Ending December 31 2013 $(396,213) 28,825 Cash tlows from operating actvities: Net income (loss) Adjustments to reconcile net loss to net cash used in operating activities: $(254,411) $(154,328) 10,623 5,022 Depreciation and amortization Change in fair value of warrant liabilities Discounts and premiums on short-term marketable securities Stock-based compensation Excess tax benefits from stock-based compensation Loss on abandonment of fixed assets Inventory write-downs Account receivables Inventory Inventories and operating lease vehicles Prepaid expenses and other current assets Other assets Operating lease assets Accounts payable Accrued liabilities Deferred development compensation Deferred revenue Reservation payments Other long-term liabilities 2,750 (74) 4,929 (17,303) 1,828 (3,222) (20,115) (194,726) (13,638) (8,398) 13,345 (156) 4,707 187,821 31,859 12 321 61,006 47,056 10.255 Net cash flows from operating activities Cash flows from investing activities 266,081114364 (127,81 Purchase of marketable securities Maturities of short-term marketable securities Payments related to acquisition of Fremont manufacturing facility and related assets Purchases of property and equipment excluding capital leases Transfer of restricted cash into its dedicated Department of Energy account Withdrawals out of (transfers into) our dedicated Department of Energy account, net Decrease (increase) in restricted cash 40,000 40,000 (239,228) 8,620 (206,930) 221,496 (65,210) (40,203) (100,000) 26,403 (197,896) Net cash flows from investing activities Cash flows from financing activiies: 175,928) Proceeds from issuance of common stock in initial public offering Proceeds from issuance of common stock in private placements Proceeds from issuance of common stock in Toyota private placement Proceeds from issuance of common stock in Panasonic private placement Principal payments on capital leases and other debt Proceeds from long-term debt and other long-term liabilities Principal payments on long-term debt Proceeds from exercise of stock options Proceeds from exercise of stock options and other stock issuances Excess tax benefits from stock-based compensation Deferred common stock and loan facility issuance costs 172,410 59,058 188,842 50,000 188,796 204,423 71,828 1,350 24,885 10,525 74 338,045 29,93 69,627 99,558 419,635 446,000 155,708 Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (53,376) 255,266 $ 255,266