The following table shows an abbreviated income statement and balance sheet forMcDonald's Corporation for 2012.INCOME STATEMENT OF MCDONALD'S CORP.,2012(Figures in $ millions)Net salesCostsDepreciationEarnings before interest and taxes(EBIT)Interest expensePretax incomeTaxesNet income27,57417,5761,4098,5895248,0652,6285,437 AssetsCurrent assetsCash and marketablesecuritiesReceivablesInventoriesOther current assetsTotal current assetsFixed assetsProperty, plant, andequipmentIntangible assets(goodwill)Other long-term assetsTotal assetsBALANCE SHEET OF MCDONALD'S CORP., 2012(Figures in $ millions)Liabilities and Shareholders'Free cash flow20122,3431,3821291,0964,95024,6842,8112,99035,43520112,3431,342 Accounts payable1246234,4322,6603,106equityCurrent liabilitiesDebt due for repaymentLong-term debt22,842 Other long-term liabilities33,040Total current liabilitiesmillionTotal liabilitiesTotal shareholders' equityIn 2012 McDonald's had capital expenditures of $3,056.a. Calculate McDonald's free cash flow in 2012. (Enter your answer in millions.)millionTotal liabilities and shareholders'equity2012-3,4103,41013,6403,064b.If McDonald's was financed entirely by equity, how much more tax would the companyhave paid? (Assume a tax rate of 35% on the revised pretax income.) (Do not roundintermediate calculations. Enter your answer in millions rounded to the nearestwhole number.)Additional tax20113883,1503,53812,1412,96420,114 18,64315,321 14,39735,435 33,040

Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets Fixed assets Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets Additional tax BALANCE SHEET OF MCDONALD'S CORP., 2012 (Figures in $ millions) Liabilities and Shareholders' SA 2012 2,343 1,382 129 1,096 4,950 24,684 2,811 2,990 2011 2,343 1,342 124 623 4,432 Long-term debt 22,842 Other long-term liabilities 2,660 3,106 35,435 33,040 equity Current liabilities Debt due for repayment Accounts payable Total current liabilities million Total liabilities Total shareholders' equity Total liabilities and shareholders' equity 2012 3,410 3,410 13,640 3,064 In 2012 McDonald's had capital expenditures of $3,056. a. Calculate McDonald's free cash flow in 2012. (Enter your answer in millions.) Free cash flow million If McDonald's was financed entirely by equity, how much more tax would the company b. have paid? (Assume a tax rate of 35% on the revised pretax income.) (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.) 20,114 15,321 35,435 2011 388 3,150 3,538 12,141 2,964 18,643 14,397 33,040

Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets Fixed assets Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets Additional tax BALANCE SHEET OF MCDONALD'S CORP., 2012 (Figures in $ millions) Liabilities and Shareholders' SA 2012 2,343 1,382 129 1,096 4,950 24,684 2,811 2,990 2011 2,343 1,342 124 623 4,432 Long-term debt 22,842 Other long-term liabilities 2,660 3,106 35,435 33,040 equity Current liabilities Debt due for repayment Accounts payable Total current liabilities million Total liabilities Total shareholders' equity Total liabilities and shareholders' equity 2012 3,410 3,410 13,640 3,064 In 2012 McDonald's had capital expenditures of $3,056. a. Calculate McDonald's free cash flow in 2012. (Enter your answer in millions.) Free cash flow million If McDonald's was financed entirely by equity, how much more tax would the company b. have paid? (Assume a tax rate of 35% on the revised pretax income.) (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.) 20,114 15,321 35,435 2011 388 3,150 3,538 12,141 2,964 18,643 14,397 33,040

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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