Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2016. INCOME STATEMENT OF QUICK BURGER CORP., 2016 (Figures

The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2016.

INCOME STATEMENT OF QUICK BURGER CORP., 2016
(Figures in $ millions)
Net sales $ 27,575
Costs 17,577
Depreciation 1,410
Earnings before interest and taxes (EBIT) $ 8,588
Interest expense 525
Pretax income 8,063
Taxes 2,822
Net income $ 5,241

BALANCE SHEET OF QUICK BURGER CORP., 2016
(Figures in $ millions)
Assets 2016 2015 Liabilities and Shareholders' Equity 2016 2015
Current assets Current liabilities
Cash and marketable securities 2,344 2,344 Debt due for repayment 391
Receivables 1,383 1,343 Accounts payable 3,411 3,151
Inventories 130 125 Total current liabilities 3,411 3,542
Other current assets 1,097 624
Total current assets 4,954 4,436
Fixed assets Long-term debt 13,641 12,142
Property, plant, and equipment 24,685 22,843 Other long-term liabilities 3,065 2,965
Intangible assets (goodwill) 2,812 2,661 Total liabilities 20,117 18,649
Other long-term assets 2,991 3,107 Total shareholders equity 15,325 14,398
Total assets 35,442 33,047 Total liabilities and shareholders equity 35,442 33,047

In 2016 Quick Burger had capital expenditures of $3,057.

a. Calculate Quick Burgers free cash flow in 2016. (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 35%.) (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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions