Why isn’t everyone satisfied with what Tesla Inc. reported as its third-quarter results?

Tesla TSLA, -10.34% delivered more cars to customers in the third quarter than it did in all of 2016, and delivered for investors $271 million in pretax operating profit, its first profitable quarter in two years, and only its third ever.

But not everyone is cheering. Skeptics, especially prominent short sellers such as Jim Chanos, who tweets as @WallStCynic, and Rob Majteles, @treehcapital on Twitter, continue to express doubts about the company and its numbers, in particular whether Tesla made all the deliveries to customers it says it did.

A spokesman for Tesla declined to comment.

It’s important to make sure that the final transfer of control of the cars to end customers, including legal paperwork, occurred during the third quarter for all transactions recorded as sales in the quarter. That’s the accounting standard for determining whether Tesla posted as revenue only what it was allowed to recognize.

On a post-earnings-report conference call on Oct. 24, CEO Elon Musk said “the car is only counted as delivered if it reaches the end customer and all the paperwork is completed correctly. So it’s the highest possible standard for considering a sale a sale.” That is consistent with what the company said was its interpretation of the new revenue-recognition accounting standards that became effective Jan. 1, 2018.

Tesla reported $5.878 billion in automotive sales, 88.5% more than in the second quarter. That is a phenomenal accomplishment by any measure, but in particular for a company that admitted in its earnings press release that “vehicle delivery and logistics” were its main challenges as its delivery system went through a similar “ramp” to what its production process had gone through in the second quarter.

Making sure to confirm delivery volumes match revenues recorded is also important from a cash-flow perspective. “We can only get the check when we give the car to the customer,” Musk said during the conference call. In August, he said, two-thirds of the way through the quarter, “the average time in North America to get a car from the factory to a customer was 30 days, which is embarrassingly long.”

By the end of the quarter, Musk said the company had “reduced it to around 20 days.”

Over time “we want to get the time from a car going from a factory to customer under seven days worldwide,” Musk said.

Multiplying the number of units sold for each model that was disclosed in the earnings release by an estimated average sales price, it is apparent that the total revenue reported approximately reflects the units Tesla said it delivered to customers during the third quarter. The company does not disclose the number of units sold in its 10Q, only in its earnings release.

Third quarter Automotive revenues (nonleasing) Units delivered per earnings release Estimated average sales price Model 3 $3.325 billion 56,065 $57,000 Model S and X and other, average $2.016 billion 27,710 $72,750 $5.251 billion Regulatory credits $189.5 million Impact from new revenue standard $437.7 million $5.878 billion GAAP revenue, per 10Q $5.878 billion

Source: MarketWatch analysis based on data from Tesla’s third-quarter 10Q and earnings press release. GAAP is Generally Accepted Accounting Principles, the standards all public companies must use to report financial results. Average price of Model 3 increased slightly from Q2, according to sources based on introduction of AWD and a Performance package. Model S price was estimated as $65,000 and Model X as $80,500.

Tesla’s total automotive sales numbers are inflated by the two additional amounts that are not related to actual cars delivered to customers: regulatory credits and the impact of the new revenue recognition rules on revenue.

A manufacturer of zero-emission vehicles like Tesla can earn regulatory credits called ZEV credits, and is allowed to sell excess credits to other manufacturers who may apply the credits to comply with regulatory requirements. Federal regulatory credits that require compliance related to greenhouse-gas emissions, or GHG, credits were also earned by Tesla and can also be sold to other manufacturers.

Tesla sold some ZEV and GHG regulatory credits in the third quarter, at a total value of $189.5 million, inflating the automotive sales line; these were recorded at no cost, or at 100% gross margin. That compares with $54 million of unidentified regulatory credits sold in the second quarter. The Wall Street Journal noted that Tesla’s earnings press release only mentioned $52 million in revenue from ZEV credits for the third quarter. Tesla’s 10Q filing on Friday provided the total amount, but that was after the stock had risen nearly 20% on the record-revenue news.

The majority of Tesla’s automotive sales revenue is recognized when control transfers upon delivery to customers, according to accounting standards. However, as a result of the adoption of the new revenue-recognition rules, Tesla recognized an additional $437.7 million for the third quarter for certain vehicle sales where revenue was previously deferred as an operating lease.

Read:The revenue-growth rate that helped fuel Tesla’s rally relied on an apples-to-oranges comparison

See also: New accounting rules trim Tesla deficit and promise faster future revenues

The logistical challenge of making so many deliveries was overcome, Musk explained during the conference call, via an expansion of “direct deliveries” wherein a Tesla employee delivers a car “wherever the customer would like,” for example to the front door of a customer’s house or office. This approach is sold as “superior from both a cost and customer-satisfaction perspective.”

“Tesla had a great quarter,” said Olga Usvyatsky, the vice president of research for Audit Analytics. “The question is whether revenue growth is sustainable in the long term.”

The Wall Street Journal also mentioned that Tesla put away $187 million for estimated warranty expenses, or about $2,242 per vehicle delivered, as compared with a second-quarter expense of $2,910 per car. Net income would have been about $56 million lower using the same figure as in the second quarter given reported sales volumes.

Tesla reportedly told the Journal the warranty provision should be lower for less expensive cars like the Model 3, which were approximately 67% of the total delivered, up from 45% of the total delivered to customers in the second quarter.

Tesla executives were pretty proud of their performance on automotive gross margin. Musk said that the company had “achieved a greater than 20% gross margin for Model 3,” and Chief Financial Officer Deppak Ahuja said that overall manufacturing costs dropped almost 30% from the second quarter to the third. In the earnings press release, the company boasted about the low level of its U.S. inventory at the end of the third quarter, including customer vehicles in transit, test-drive vehicles, service loaners and engineering fleet — all of which accounted for the “vast majority” of inventory. The inventory balance “remains the lowest in the industry when measured in terms of days of sales,” according to the company.

However, the number shown for inventory on the balance sheet at the end of the third quarter also benefited from a downward adjustment of $117.1 million to reflect the impact of the new accounting rules for revenue recognition as compared with 2017.

Ahuja doubled down on the claim of lower manufacturing costs and a lean inventory balance on the conference call. “We produced more volumes, so we had better fixed cost absorption. We have far less scrap.”

That’s true about the scrap. During the third quarter Tesla recorded inventory write-downs for scrap, shrinkage and obsolescence of $12.4 million as compared with $26.2 million for the same period in 2017. What wasn’t mentioned is that the company also pulled $72.8 million out of finished-goods inventory, which increases gross margins and reduces inventory balances by converting some of its fleet cars into service loaners permanently. The cost to produce those cars was reclassified as an asset on the property-plant-and-equipment line of the balance sheet.

The significant increase in accounts receivable, from $569.9 million in the second quarter to nearly $1.2 billion at the end of the third quarter, also created an opportunity for speculation by critics. Some critics latched on to the disclosure by the company in the 10Q filing that, “as of September 30, 2018, one entity represented 10% or more of our total accounts receivable balance. As of December 31, 2017, no entity represented 10% of our total accounts receivable balance.”

Although the company reported almost doubled deliveries to customers sequentially, automotive sales to individual customers are not supposed to create a receivable. As Musk said, the company gets its cash when it delivers the car.

Was this big customer an unreported fleet sale, which would not pay cash all at once, or perhaps a new receivable from a vendor? That would tie in with unconfirmed reports Tesla was suddenly trying to collect cash back from vendors for earlier purchases despite never having disclosed such agreements in the past.

Read:Tesla says it did not ask suppliers for cash back

Ahuja remarked offhandedly on the conference call on the accounts-receivable increase, even confusing it with accounts payable, which also logically increased, saying it was because the quarter-end, on Sept. 30, landed on a weekend. The company won’t have that in the fourth quarter, he said, referring to the last day of that quarter’s falling on a Sunday.

What happened?

The increase likely has something to do with extraordinary effort made by “employees across the board, from sales, production, delivery, service, energy, engineering, finance and all of our G&A teams,” said Musk on the conference call.

The Tesla CEO even thanked customers who, he said, had helped in the last-minute push to make the quarter successful. “It’s like, I’ve never even heard of this, maybe this has happened before, but I’ve never heard of it, of a case where a company’s customer has actually cared about the future of the company so much that they volunteer their time to help the company succeed,” said Musk.

If there was a big push to deliver cars to customers’ homes, offices or other locations all the way into the last days of the quarter, it is not surprising that the cash for those last days’ efforts, especially for bank-financed cars, was not in Tesla’s bank by Friday, Sept. 28. A person with knowledge of the company’s operations told MarketWatch that one bank, a customer finance partner, was unable to send the last of the funds owed for cars delivered at the very end of the quarter, more than $500 million, until after the weekend that ended Sept. 30.

Musk told analysts on Oct. 24 that he expects to “produce and sell even more Model 3s in the fourth quarter.” He also said he expects that trend to continue into the first quarter of 2019.

“Why did Tesla focus in its earnings release on the 70,000 U.S. total autos delivered rather than specifically mention the overall total delivered of 83,000?” asked Tom Selling, a professor emeritus at the Thunderbird School of Global Management, and author of the Accounting Onion blog. “The 10-Q disclosures don’t even mention units delivered. There was a significant ramp up in production in [the second quarter] and now deliveries in [the third quarter] translating to revenues in this quarter that is arguably more important in understanding future trends than the traditional comparison to same quarter last year. This is only a quarterly report as opposed to an annual report, but given Musk’s promises it would seem that investors would be most interested in forward looking information about future sales.”

Tesla has always had high executive-rank employee turnover, but the exits on the accounting and finance side have accelerated in the past few months. On Sept. 4, Dave Morton resigned from his post of chief accounting officer after just a month on the job.

Last Thursday the Department of Justice announced criminal charges against a former Tesla employee in its global supply management group. Salil Parulekar allegedly diverted $9.3 million from one Tesla supplier to another. The indictment alleges Parulekar falsified invoices, creating fraudulent accounts-payable documents, such as bank account information and wire instructions and impersonated vendor employees to deceive Tesla’s accounts payable division into paying fake invoices.

The indictment also says Paralekar forged the signature of his supervisor, identified only by the initials L.O. on documents. A Liam O’Connor, vice president of the global supply management group, resigned from Tesla on Sept. 20.

On Wednesday the company announced Robyn Denholm, who joined the Tesla board in 2014, would take over as board chairwoman, after the settlement between the Securities and Exchange Commission and Elon Musk and Tesla over his “funding secured” tweets required Musk to step down from that position.

The SEC isn’t done with the company. Tesla disclosed in a recent filing that the regulator had subpoenaed it about disclosures regarding its Model 3 production numbers. There are also two Justice Department investigations open, one on the “funding secured” episode and the other looking at the Model 3 production disclosures.

Rob Majteles, a private investor with the firm Treehouse Capital, said he remains skeptical, and continues to be short Tesla. “At some point, the sheer volume of maneuvers, clarifications, caveats, and assumptions it takes to reconcile Tesla’s numbers — even by experts — is itself damning,” said Majteles.

“In addition, isn’t it interesting, in a bad way, that every single bit of finance and accounting confusion always, always, somehow magically reconciles in Tesla’s favor in the current quarter in which those numbers are presented, spun and pitched? One quarter of supposedly good results and the chronic turnover in the accounting department, the lawsuits, the excessive and egregious promotion that has always marred this company somehow … all gets washed away.”