Volkswagen is considering expansion of its manufacturing facility in Chattanooga Tennessee (USA). The current Balance Sheet and
Question:
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
Expert Answer:
Here is the analysis of how the Balance Sheet and Income Statement components would be impacted by t... View the full answer
Fundamentals of Financial Management
ISBN: 978-0324272055
10th edition
Authors: Eugene F. Brigham, Joel F. Houston
