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a. Calculate Quick Burger's free cash flow in 2019. (Enter your answer in millions.) Free cash flow 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.) Additional tax million Free cash flow million c. What would the company's free cash flow have been if it was all-equity financed? (Enter your answer in millions.)

a. Calculate Quick Burger's free cash flow in 2019. (Enter your answer in millions.) Free cash flow 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.) Additional tax million Free cash flow million c. What would the company's free cash flow have been if it was all-equity financed? (Enter your answer in millions.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Costs Depreciation Earnings before interest and taxes (EBIT) Interest expense Pretax income Federal taxes (@21%) Net income 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 2019 $ 2,340 1,379 126 1,093 $ 4,938 $ 27,571 17,573 1,406 $ 8,592 BALANCE SHEET OF QUICK BURGER CORP., 2019 (Figures in $ millions) 2018 $24,681 2,808 2,987 $35,414 521 8,071 1,695 $ 6,376 $ 2,340 1,339 121 620 $4,420 $22,839 2,657 3,103 $33,019 In 2019 Quick Burger had capital expenditures of $3,053. Liabilities and Shareholders' Equity Current liabilities Debt due for repayment Accounts payable Total current liabilities 2019 $ 379 3,147 $3,407 $3,407 $3,526 $13,637 3,061 $20, 105 2018 Long-term debt Other long-term liabilities Total liabilities Total shareholders' equity 15,309 Total liabilities and shareholders' equity $35,414 $12, 138 2,961 $18,625 14,394 $33,019
Transcribed Image Text: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 Costs Depreciation Earnings before interest and taxes (EBIT) Interest expense Pretax income Federal taxes (@21%) Net income 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 2019 $ 2,340 1,379 126 1,093 $ 4,938 $ 27,571 17,573 1,406 $ 8,592 BALANCE SHEET OF QUICK BURGER CORP., 2019 (Figures in $ millions) 2018 $24,681 2,808 2,987 $35,414 521 8,071 1,695 $ 6,376 $ 2,340 1,339 121 620 $4,420 $22,839 2,657 3,103 $33,019 In 2019 Quick Burger had capital expenditures of $3,053. Liabilities and Shareholders' Equity Current liabilities Debt due for repayment Accounts payable Total current liabilities 2019 $ 379 3,147 $3,407 $3,407 $3,526 $13,637 3,061 $20, 105 2018 Long-term debt Other long-term liabilities Total liabilities Total shareholders' equity 15,309 Total liabilities and shareholders' equity $35,414 $12, 138 2,961 $18,625 14,394 $33,019
a. Calculate Quick Burger's free cash flow in 2019. (Enter your answer in millions.) Free cash flow 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.) Additional tax million Free cash flow million c. What would the company's free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
Transcribed Image Text:a. Calculate Quick Burger's free cash flow in 2019. (Enter your answer in millions.) Free cash flow 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.) Additional tax million Free cash flow million c. What would the company's free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
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