FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:b. 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.)
Additional tax
million
c. What would the company's free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
Free cash flow
Transcribed Image Text:The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2019.
INCOME STATEMENT OF QUICK BURGER CORP., 2019
(Figures in $ millions)
$ 27,583
17,585
1,418
Net sales
Costs
Depreciation
Earnings before interest and taxes
Interest expense
(ЕBIT)
$ 8,580
533
Pretax income
8,047
Federal taxes (@ 21%)
1,690
Net income
$ 6,357
BALANCE SHEET OF QUICK BURGER CORP.,
2019
(Figures in $ millions)
Assets
2019
2018
Liabilities and Shareholders
Equity
2019
2018
Current assets
Current liabilities
$ 2,352
1,351
Debt due for repayment
Accounts payable
Cash and marketable securities
$ 2,352
$
$ 3,419
$ 3,419
415
3,159
$ 3,574
Receivables
1,391
Inventories
138
133
Total current liabilities
1,105
$ 4,986
Other current assets
632
Total current assets
$ 4,468
Long-term debt
Other long-term liabilities
$12,150
2,973
$18,697
14,406
Fixed assets
$13,649
Property, plant, and equipment
Intangible assets (goodwill)
Other long-term assets
3,073
$20,141
15,357
$24,693
$22,851
2,820
2,999
2,669
Total liabilities
3,115
Total shareholders' equity
Total assets
$ 35,498
$ 33,103
Total liabilities and shareholders' equity $35,498
$33,103
In 2019 Quick Burger had capital expenditures of $3,065.
a. Calculate Quick Burger's free cash flow in 2019. (Enter your answer in millions.)
Free cash flow
million
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