The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 Net sales Costs Depreciation (Figures in $ millions) Earnings before interest and taxes (EBIT) Interest expense Pretax income Federal taxes (@ 21%) $ 27,572 17,574 1,407 $ 8,591 522 8,069 1,694 Net income $ 6,375 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets $ 4,942 2022 2021 Liabilities and Shareholders' Equity Current liabilities 2022 2021 $ 2,341 1,380 $ 2,341 Debt due for repayment 1,340 Accounts payable 127 1,094 $ 4,424 122 621 Total current liabilities $ 3,408 $ 3,408 $ 382 3,148 $ 3,530 Fixed assets Long-term debt Property, plant, and equipment $ 24,682 2,809 2,988 $ 22,840 Other long-term liabilities 2,658 Total liabilities 3,104 Total shareholders' equity $ 35,421 $ 33,026 Total liabilities and shareholders' equity $ 13,638 3,062 $ 20,108 15,313 $ 35,421 $ 12,139 2,962 $ 18,631 14,395 $ 33,026 Intangible assets (goodwill) Other long-term assets Total assets In 2022 Quick Burger had capital expenditures of $3,054. a. Calculate Quick Burger's free cash flow in 2022. Note: Enter your answer in millions. b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. c. What would the company's free cash flow have been if it was all-equity financed? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number. Answer is complete but not entirely correct. a. Free cash flow $ 4,728 million b. Additional tax $ 109.62 million c. Free cash flow $ 4,728 million
The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 Net sales Costs Depreciation (Figures in $ millions) Earnings before interest and taxes (EBIT) Interest expense Pretax income Federal taxes (@ 21%) $ 27,572 17,574 1,407 $ 8,591 522 8,069 1,694 Net income $ 6,375 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets $ 4,942 2022 2021 Liabilities and Shareholders' Equity Current liabilities 2022 2021 $ 2,341 1,380 $ 2,341 Debt due for repayment 1,340 Accounts payable 127 1,094 $ 4,424 122 621 Total current liabilities $ 3,408 $ 3,408 $ 382 3,148 $ 3,530 Fixed assets Long-term debt Property, plant, and equipment $ 24,682 2,809 2,988 $ 22,840 Other long-term liabilities 2,658 Total liabilities 3,104 Total shareholders' equity $ 35,421 $ 33,026 Total liabilities and shareholders' equity $ 13,638 3,062 $ 20,108 15,313 $ 35,421 $ 12,139 2,962 $ 18,631 14,395 $ 33,026 Intangible assets (goodwill) Other long-term assets Total assets In 2022 Quick Burger had capital expenditures of $3,054. a. Calculate Quick Burger's free cash flow in 2022. Note: Enter your answer in millions. b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. c. What would the company's free cash flow have been if it was all-equity financed? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number. Answer is complete but not entirely correct. a. Free cash flow $ 4,728 million b. Additional tax $ 109.62 million c. Free cash flow $ 4,728 million
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022.
INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022
Net sales
Costs
(Figures in $ millions)
Depreciation
$ 27,572
17,574
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
BALANCE SHEET OF QUICK BURGER CORPORATION, 2022
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
(Figures in $ millions)
2022
2021
Liabilities and Shareholders' Equity
Current liabilities
2022
2021
$ 2,341
$ 2,341
Debt due for repayment
1,380
127
1,340
Accounts payable
122
Total current liabilities
$ 3,408
$ 3,408
$ 382
3,148
$ 3,530
1,094
$ 4,942
621
$ 24,682
2,809
2,988
2,658
$ 4,424
Long-term debt
$ 22,840 Other long-term liabilities
Total liabilities
3,104 Total shareholders' equity
$ 35,421
$ 33,026 Total liabilities and shareholders' equity
$ 13,638
3,062
$ 20,108
15,313
$ 35,421
$ 12,139
2,962
$ 18,631
14,395
$ 33,026
In 2022 Quick Burger had capital expenditures of $3,054.
a. Calculate Quick Burger's free cash flow in 2022.
Note: Enter your answer in millions.
b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.)
Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.
c. What would the company's free cash flow have been if it was all-equity financed?
Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.
Answer is complete but not entirely correct.
a. Free cash flow $
4,728 million
b. Additional tax
$
109.62
million
c. Free cash flow
$
4,728 million
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