Volkswagen is considering expansion of its manufacturing facility in Chattanooga Tennessee (USA). The current Balance Sheet and Income Statement for Volkswagen is provided.  For each statement, identify which components will be impacted and qualitatively how once the project is complete.  You do not need to provide new numbers.  You should assume that the expansion will be profitable, the earnings will be retained by the company, and will be financed through additional debt.

 

Financial Statements - Volkswagen Chattanooga TN USA Facility (hypothetical)

Balance Sheet (in millions)

Assets: 

Current assets:

Inventory                          $ 40 

Other current assets     $  60               

Total current assets                 $100

Long term assets: 

Equipment                                       $200 

less Accumulated depreciation    $  50              

Net equipment assets                              $150

 

Other long-term assets                 $300 

Total long-term assets                   $450                

Total Assets                                                $550

 

 Liabilities and Equity: 

Current liabilities:

Accrued Liabilities                      $ 25 

Other current liabilities              $ 30               

Total current liabilities                           $ 55 

 

Debt                                        $145

 

Stockholders equity             $350                 

Total liabilities and equity                   $550 

 

Income Statement (in millions) 

Sales                                   $800

Cost of goods sold           $400 

 

Gross profit                        $400 

 

Operating expenses           $250 

Operating profit                   $150 

Interest expense                 $ 50 

Pretax profit                       $100 

Taxes                                   $ 30 

Net income                         $ 70