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Problem 3-24 Free Cash Flow (LO3) The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 (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 Other curr Total current assets Fixed assets Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets a. Free cash flow b. Additional tax c. Free cash flow $ $ 27,583 17,585 1,418 $ 8,580 2022 3,861 million million million 533 8,047 1,690 $ 6,357 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) 2021 $ 2,352 1,391 138 1,105 $ 4,986 $ 24,693 2,820 2,999 $ 35,498 $ 2,352 1,351 133 632 $ 4,468 Liabilities and Shareholders' Equity Current liabilities Debt due for repayment Accounts payable Total current liabilities Long-term debt Other long-term liabilities Total liabilities $ 22,851 2,669 3,115 Total shareholders' equity $33,103 Total liabilities and shareholders' equity 2022 In 2022 Quick Burger had capital expenditures of $3,065. a. Calculate Quick Burger's free cash flow in 2022. (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.) $ 3,419 $3,419 c. What would the company's free cash flow have been if it was all-equity financed? (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.) $ 13,649 3,073 $ 20,141 15,357 $ 35,498 2021 $415 3,159 $ 3,574 $ 12,150 2,973 $ 18,697 14,406 $ 33,103

Problem 3-24 Free Cash Flow (LO3) The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 (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 Other curr Total current assets Fixed assets Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets a. Free cash flow b. Additional tax c. Free cash flow $ $ 27,583 17,585 1,418 $ 8,580 2022 3,861 million million million 533 8,047 1,690 $ 6,357 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) 2021 $ 2,352 1,391 138 1,105 $ 4,986 $ 24,693 2,820 2,999 $ 35,498 $ 2,352 1,351 133 632 $ 4,468 Liabilities and Shareholders' Equity Current liabilities Debt due for repayment Accounts payable Total current liabilities Long-term debt Other long-term liabilities Total liabilities $ 22,851 2,669 3,115 Total shareholders' equity $33,103 Total liabilities and shareholders' equity 2022 In 2022 Quick Burger had capital expenditures of $3,065. a. Calculate Quick Burger's free cash flow in 2022. (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.) $ 3,419 $3,419 c. What would the company's free cash flow have been if it was all-equity financed? (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.) $ 13,649 3,073 $ 20,141 15,357 $ 35,498 2021 $415 3,159 $ 3,574 $ 12,150 2,973 $ 18,697 14,406 $ 33,103

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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Problem 3-24 Free Cash Flow (LO3) The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 (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 a. Free cash flow b. Additional tax c. Free cash flow $ 3,861 million million million $ 27,583 17,585 1,418 $ 8,580 533 8,047 1,690 $ 6,357 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) 2021 2022 $ 2,352 1,391 138 1,105 $ 4,986 $ 24,693 2,820 2,999 $ 35,498 $ 2,352 1,351 133 632 $ 4,468 Liabilities and Shareholders' Equity Current liabilities Debt due for repayment Accounts payable Total current liabilities Long-term debt $ 22,851 Other long-term liabilities Total liabilities 2,669 3,115 Total shareholders' equity $ 33,103 Total liabilities and shareholders' equity 2022 In 2022 Quick Burger had capital expenditures of $3,065. a. Calculate Quick Burger's free cash flow in 2022. (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 company's free cash flow have been if it was all-equity financed? (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.) $ 3,419 $3,419 $ 13,649 3,073 $ 20,141 15,357 $ 35,498 2021 $415 3,159 $ 3,574 $ 12,150 2,973 $ 18,697 14,406 $33,103
Transcribed Image Text:Problem 3-24 Free Cash Flow (LO3) The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 (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 a. Free cash flow b. Additional tax c. Free cash flow $ 3,861 million million million $ 27,583 17,585 1,418 $ 8,580 533 8,047 1,690 $ 6,357 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) 2021 2022 $ 2,352 1,391 138 1,105 $ 4,986 $ 24,693 2,820 2,999 $ 35,498 $ 2,352 1,351 133 632 $ 4,468 Liabilities and Shareholders' Equity Current liabilities Debt due for repayment Accounts payable Total current liabilities Long-term debt $ 22,851 Other long-term liabilities Total liabilities 2,669 3,115 Total shareholders' equity $ 33,103 Total liabilities and shareholders' equity 2022 In 2022 Quick Burger had capital expenditures of $3,065. a. Calculate Quick Burger's free cash flow in 2022. (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 company's free cash flow have been if it was all-equity financed? (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number.) $ 3,419 $3,419 $ 13,649 3,073 $ 20,141 15,357 $ 35,498 2021 $415 3,159 $ 3,574 $ 12,150 2,973 $ 18,697 14,406 $33,103
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