Question

For the year ended December 31st, 2019, Tesla Inc. reports Net Loss (i.e., negative Net Income) of - 775 million dollars in its Consolidated Statement of Operations (i.e., income statement). However, for the year ended December 31st, 2019, Tesla Inc. reports Net Cash Provided by Operations in its Consolidated Statement of Cash Flows (i.e., cash flow statement) of positive +2,405 million dollars. That means Operating Cash flows are $3,180 million (2405 + 775) greater than Net Income. What is the line on the cash flow statement that accounts for (i.e. makes up) the largest portion of these 3,180 million differences and what is the amount written on that line for the year ended December 31st, 2019?

Answer 1

Cash flow from operating activities of manufacturing sector is mainly increased because of the depreciation amount. When net profit or loss from profit and loss account is taken then first amount added back to the profit figure is the depreciation (since it is a non cash item). For manufacturing sector, depreciation is a major non cash item. Second factor that is added back is interest on loan paid, because the interest paid is an expenses from financing activity and should be added to the profot figure. So these two are the top line items added to the amount derived from profit and loss account as to increase cash from operating activities.