Question
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
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) Net sales $ 27,581 Costs 17,583 Depreciation 1,416 Earnings before interest and taxes (EBIT) $ 8,582 Interest expense 531 Pretax income 8,051 Federal plus other taxes 2,818 Net income $ 5,233 BALANCE SHEET OF QUICK BURGER CORP., 2019 (Figures in $ millions) Assets 2019 2018 Liabilities and Shareholders' Equity 2019 2018 Current assets Current liabilities Cash and marketable securities $ 2,350 $ 2,350 Debt due for repayment $ 409 Receivables 1,389 1,349 Accounts payable $ 3,417 3,157 Inventories 136 131 Total current liabilities $ 3,417 $ 3,566 Other current assets 1,103 630 Total current assets $ 4,978 $ 4,460 Fixed assets Long-term debt $ 13,647 $ 12,148 Property, plant, and equipment $ 24,691 $ 22,849 Other long-term liabilities 3,071 2,971 Intangible assets (goodwill) 2,818 2,667 Total liabilities $ 20,135 $ 18,685 Other long-term assets 2,997 3,113 Total shareholders equity 15,349 14,404 Total assets $ 35,484 $ 33,089 Total liabilities and shareholders equity $ 35,484 $ 33,089 In 2019 Quick Burger had capital expenditures of $3,063
. a. Calculate Quick Burgers free cash flow in 2019. (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%.) (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
c. What would the companys free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
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