Calculate Quick Burger’s free cash flow in 2019. (Enter your answer in millions.) If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) What would the company’s free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2019.
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INCOME STATEMENT OF QUICK BURGER CORP., 2019 |
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(Figures in $ millions) |
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Net sales |
$ |
27,572 |
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|
Costs |
|
17,574 |
|
|
Depreciation |
|
1,407 |
|
|
Earnings before interest and taxes (EBIT) |
$ |
8,591 |
|
|
Interest expense |
|
522 |
|
|
Pretax income |
|
8,069 |
|
|
Federal taxes (@ 21%) |
|
1,694 |
|
|
Net income |
$ |
6,375 |
|
|
|
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BALANCE SHEET OF QUICK BURGER CORP., 2019 |
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(Figures in $ millions) |
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Assets |
2019 |
|
2018 |
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Liabilities and Shareholders' Equity |
2019 |
|
2018 |
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Current assets |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Cash and marketable securities |
$ |
2,341 |
|
|
$ |
2,341 |
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|
Debt due for repayment |
|
— |
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|
$ |
382 |
|
|
|
Receivables |
|
1,380 |
|
|
|
1,340 |
|
|
Accounts payable |
$ |
3,408 |
|
|
|
3,148 |
|
|
|
Inventories |
|
127 |
|
|
|
122 |
|
|
Total current liabilities |
$ |
3,408 |
|
|
$ |
3,530 |
|
|
|
Other current assets |
|
1,094 |
|
|
|
621 |
|
|
|
|
|
|
|
|
|
|
|
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Total current assets |
$ |
4,942 |
|
|
$ |
4,424 |
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|
|
|
|
|
|
|
|
|
|
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Fixed assets |
|
|
|
|
|
|
|
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Long-term debt |
$ |
13,638 |
|
|
$ |
12,139 |
|
|
|
Property, plant, and equipment |
$ |
24,682 |
|
|
$ |
22,840 |
|
|
Other long-term liabilities |
|
3,062 |
|
|
|
2,962 |
|
|
|
Intangible assets ( |
|
2,809 |
|
|
|
2,658 |
|
|
Total liabilities |
$ |
20,108 |
|
|
$ |
18,631 |
|
|
|
Other long-term assets |
|
2,988 |
|
|
|
3,104 |
|
|
Total shareholders’ equity |
|
15,313 |
|
|
|
14,395 |
|
|
|
Total assets |
$ |
35,421 |
|
|
$ |
33,026 |
|
|
Total liabilities and shareholders’ equity |
$ |
35,421 |
|
|
$ |
33,026 |
|
|
In 2019 Quick Burger had capital expenditures of $3,054.
- Calculate Quick Burger’s
free cash flow in 2019. (Enter your answer in millions.)
- If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
- What would the company’s free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
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