$TSLAQ I have received excellent feedback and have made corrections to calculations. I also simplified the presentation of the information. This will be by quarter starting from Q3 2019. I want to take a few posts to explain my thesis, method & the accounting. (1/21)
I do a quarterly review of discretionary accruals of $TSLAQ and have always known that they are manipulated. To be fair, the entirety of the S&P 500 does it to an extent. It’s human nature & I find it entertaining to see each company’s thresholds. (2/21)
It also gives me the Charlie Munger (yes Munger not Buffet) test for management integrity. If you are not yanking accruals around (by the way Carvana is a shipwreck,) it’s a great indicator of management quality. Especially in bad quarters. (3/21)
The last three quarters, $TSLAQ accruals went beyond a Hank Greenberg and approached a WorldCom. In order find the depth of the problem, I needed to verify the scope from two methods. Cash & a balance sheet area that could house the offsetting journal entry. (4/21)
I posted one thread that postulated that to find a fraud, look at the most boring accounts. I used prepaids as an example. Little audit risk is associated with the account and it did not balance to cash flow, expenses & capitalized balance. (5/21)
This is just a “more cowbell” version of prepaids but I used the cash flow statement and compared it to a logical account classification. Boring fixed assets where an entire production facility has been built with no assets on the balance sheet. (6/21)
The cash flow statement is divided into three functional areas. Operating activities, investing activities, & financing activities. Operating activities is the income statement. Start with net income and add back non-cash expenses. (continued) (7/21)
Take the beginning balance of current assets & liabilities, then subtract the ending balance. If its an asset & it goes up, cash goes down. If it goes down, cash goes up. If a liability goes up, cash goes up. If it goes down, cash goes down. (8/21)
Investing houses long term assets. Purchases & sales primarily. There is other odd stuff. Financing is changes (increases or decreases) in equity and long-term debt. Fixed assets are in investing (it’s also called PPE.) (9/21)
But what if a balance are altered? As in my account name Abnormal Accrual? Cash flow does not balance. Another account must be changed. My thesis is China has existed on the balance sheet and has been disappearing slowly in front of our eyes. (10/21)
My method was (1) to recreate the cash flow statement from the current asset & liability adjustments and (2) attempt to calculate the actual purchases of fixed assets. Cash flow was tedious but the adjustments are on the spreads. (11/21)
Fixed asset purchases are calculated from cash flow statement, gains, non-cash financing, and the existing balances in the balance sheet. It’s an estimate. My original had a calculation error as well that has been corrected. (12/21)
Finally, I also needed the time which I have had the last two days. Before I go deep into another accounting wonderland, if anyone wants my spreads just DM me. If I follow you, they are yours. More eyes are better. I make mistakes all the time. (13/21)
I want to reinforce the idea of mistakes. My avatar is Freddie Kitchens while at Bama. He did finish 1-1 vs Auburn as a starter. But, when fans taunted him after a bad play, he would throw the ball at them in the stands. From the field at Bryant Denny. Good times. (14/21)
Attached is Q3 2019. The actual cash flow statement was off by $250m. See the account balance changes? They are in the beige. Net loss & noncash I used from the cash flow statement. The beginning & ending balances are from the balance sheet to the right. (15/21) 
PPE reconciliation is on the right. It starts with the historical cost less accumulated depreciation to get Net PPE. The depreciation expense came from the cash flow statement. Asset sales are calculated (continued) (16/21)
by taking the change in accumulated depreciation from the previous quarter less depreciation expense. On asset sales accumulated depreciation is removed with the historical cost of the asset. Add back the loss & it should be the asset’s cost. (17/21
Next take purchases from cash flow + non cash purchases (from cash flow statement) subtract asset sale & it should give asset purchased. Subtract the reported asset change on from historical costs and it should be a close match. It’s not. (18/21)
It’s off by $260m. Cash flow is off by $250m. It could be a one off so let's try again. (19/21)
This time Q3 2019. Same exact method. PPE has a $442m discrepancy. Cash flow has a similar issue. It’s off $449m. (20/21)
Third time. Q3 2020. $344m cash flow vs $330m PPE. This is not a fluke. It's $942m in these three quarters alone. Profits were $264m for the same period. It's 3.5x their profitability over these quarters. This manipulation is 3.5x their profitability. And it is fraud. (21/21)
Addendum: This meets materiality thresholds for audit & is a restatement at best with a change of external & endless litigation. That is if the company can survive & nothing else is lurking in the financials.
@montana_skeptic This is a cleaner version of the last post. Better narrative with prettier spreads. Please see if @TESLAcharts or @orthereaboot can spend some time on it. This is more real than I thought.
