McDonald's Corporation for 2012. INCOME STATEMENT OF MCDONALD’S CORP., 2012 (Figures in $ millions) Net sales 27,574 Costs 17,576 Depreciation 1,409 Earnings before interest and taxes (EBIT) 8,589 Interest expense 524 Pretax income 8,065 Taxes 2,628 Net income 5,437 BALANCE SHEET OF MCDONALD’S CORP., 2012 (Figures in $ millions) Assets 2012 2011 Liabilities and Shareholders' equity 2012 2011 Current assets Current liabilities Cash and marketable securities 2,343 2,343 Debt due for repayment — 388 Receivables 1,382 1,342 Accounts payable 3,410 3,150 Inventories 129 124 Total current liabilities 3,410 3,538 Other current assets 1,096 623 Total current assets 4,950 4,432 Fixed assets Long-term debt 13,640 12,141 Property, plant, and equipment 24,684 22,842 Other long-term liabilities 3,064 2,964 Intangible assets (goodwill) 2,811 2,660 Total liabilities 20,114 18,643 Other long-term assets 2,990 3,106 Total shareholders’ equity 15,321 14,397 Total assets 35,435 33,040 Total liabilities and shareholders’ equity 35,435 33,040 In 2012 McDonald’s had capital expenditures of $3,056. a. Calculate McDonald’s free cash flow in 2012. (Enter your answer in millions.) Free cash flow $ million b. If McDonald’s 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

McDonald's Corporation for 2012. INCOME STATEMENT OF MCDONALD’S CORP., 2012 (Figures in $ millions) Net sales 27,574 Costs 17,576 Depreciation 1,409 Earnings before interest and taxes (EBIT) 8,589 Interest expense 524 Pretax income 8,065 Taxes 2,628 Net income 5,437 BALANCE SHEET OF MCDONALD’S CORP., 2012 (Figures in $ millions) Assets 2012 2011 Liabilities and Shareholders' equity 2012 2011 Current assets Current liabilities Cash and marketable securities 2,343 2,343 Debt due for repayment — 388 Receivables 1,382 1,342 Accounts payable 3,410 3,150 Inventories 129 124 Total current liabilities 3,410 3,538 Other current assets 1,096 623 Total current assets 4,950 4,432 Fixed assets Long-term debt 13,640 12,141 Property, plant, and equipment 24,684 22,842 Other long-term liabilities 3,064 2,964 Intangible assets (goodwill) 2,811 2,660 Total liabilities 20,114 18,643 Other long-term assets 2,990 3,106 Total shareholders’ equity 15,321 14,397 Total assets 35,435 33,040 Total liabilities and shareholders’ equity 35,435 33,040 In 2012 McDonald’s had capital expenditures of $3,056. a. Calculate McDonald’s free cash flow in 2012. (Enter your answer in millions.) Free cash flow $ million b. If McDonald’s 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

The following table shows an abbreviated income statement and balance sheet for McDonald's Corporation for 2012.

INCOME STATEMENT OF MCDONALD’S CORP., 2012
(Figures in $ millions)
Net sales	27,574
Costs	17,576
Depreciation	1,409

Earnings before interest and taxes (EBIT)	8,589
Interest expense	524

Pretax income	8,065
Taxes	2,628

Net income	5,437

BALANCE SHEET OF MCDONALD’S CORP., 2012
(Figures in $ millions)
Assets	2012		2011	Liabilities and Shareholders' equity	2012	2011
Current assets							Current liabilities
Cash and marketable securities		2,343			2,343		Debt due for repayment	—	388
Receivables		1,382			1,342		Accounts payable	3,410	3,150

Inventories		129			124		Total current liabilities	3,410	3,538
Other current assets		1,096			623

Total current assets		4,950			4,432
Fixed assets							Long-term debt	13,640	12,141
Property, plant, and equipment		24,684			22,842		Other long-term liabilities	3,064	2,964

Intangible assets (goodwill)		2,811			2,660		Total liabilities	20,114	18,643
Other long-term assets		2,990			3,106		Total shareholders’ equity	15,321	14,397

Total assets		35,435			33,040		Total liabilities and shareholders’ equity	35,435	33,040

In 2012 McDonald’s had capital expenditures of $3,056.

a.	Calculate McDonald’s free cash flow in 2012. (Enter your answer in millions.)

Free cash flow

$ million

b.	If McDonald’s 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

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.