Question
The following table shows an abbreviated income statement and balance sheet for McDonald's Corporation for 2012. INCOME STATEMENT OF MCDONALDS CORP., 2012 (Figures in $
The following table shows an abbreviated income statement and balance sheet for McDonald's Corporation for 2012. INCOME STATEMENT OF MCDONALDS CORP., 2012 (Figures in $ millions) Net sales 27,572 Costs 17,574 Depreciation 1,407 Earnings before interest and taxes (EBIT) 8,591 Interest expense 522 Pretax income 8,069 Taxes 2,624 Net income 5,445 BALANCE SHEET OF MCDONALDS CORP., 2012 (Figures in $ millions) Assets 2012 2011 Liabilities and Shareholders' equity 2012 2011 Current assets Current liabilities Cash and marketable securities 2,341 2,341 Debt due for repayment 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 Total current assets 4,942 4,424 Fixed assets 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 (goodwill) 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 2012 McDonalds had capital expenditures of $3,054. a. Calculate McDonalds free cash flow in 2012. (Enter your answer in millions.) Free cash flow $ million b. If McDonalds was financed entirely by equity, how much more tax would the company 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.) Additional tax $ million
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started