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 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 27,570
Costs 17,572
Depreciation 1,405
Earnings before interest and taxes (EBIT) 8,593
Interest expense 520
Pretax income 8,073
Taxes 2,620
Net income 5,453

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 2,339 2,339 Debt due for repayment 376
Receivables 1,378 1,338 Accounts payable 3,406 3,146
Inventories 125 120 Total current liabilities 3,406 3,522
Other current assets 1,092 619
Total current assets 4,934 4,416
Fixed assets Long-term debt 13,636 12,137
Property, plant, and equipment 24,680 22,838 Other long-term liabilities 3,060 2,960
Intangible assets (goodwill) 2,807 2,656 Total liabilities 20,102 18,619
Other long-term assets 2,986 3,102 Total shareholders equity 15,305 14,393
Total assets 35,407 33,012 Total liabilities and shareholders equity 35,407 33,012

In 2012 McDonalds had capital expenditures of $3,052.

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

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

Step: 3

blur-text-image

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

Corporate Finance Text And Cases

Authors: Vishwanath S. R.

3rd Edition

9353282896, 978-9353282899

More Books

Students also viewed these Accounting questions