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 Costs Depreciation 27,578 17,580 1,413 Earnings before interest and taxes 8,585 (EBIT) Interest expense 528 Pretax income 8,057 Taxes 2,636 Net income 5,421 BALANCE SHEET OF MCDONALD'S CORP., 2012 (Figures in $ millions) Liabilities and Shareholders' Assets 2012 2011 equity 2012 2011 Current assets Current liabilities Cash and marketable 2,347 2,347 Debt due for repayment 400 securities Receivables 1,386 1,346 Accounts payable 3,414 3,154 Inventories 133 128 Total current liabilities 3,414 3,554 Other current assets 1,100 627 Total current assets 4,966 4,448 Fixed assets Long-term debt 13,644 12,145 Property, plant, and 24,688 22,846 Other long-term liabilities 3,068 2,968 equipment Intangible assets 2,815 2,664 Total liabilities 20,126 18,667 (goodwill) Other long-term assets 2,994 3,110 Total shareholders' equity 15,337 14,401 Total assets 35,463 33,068 Total liabilities and shareholders' equity 35,463 33,068 In 2012 McDonald's had capital expenditures of $3,060. 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
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 Costs Depreciation 27,578 17,580 1,413 Earnings before interest and taxes 8,585 (EBIT) Interest expense 528 Pretax income 8,057 Taxes 2,636 Net income 5,421 BALANCE SHEET OF MCDONALD'S CORP., 2012 (Figures in $ millions) Liabilities and Shareholders' Assets 2012 2011 equity 2012 2011 Current assets Current liabilities Cash and marketable 2,347 2,347 Debt due for repayment 400 securities Receivables 1,386 1,346 Accounts payable 3,414 3,154 Inventories 133 128 Total current liabilities 3,414 3,554 Other current assets 1,100 627 Total current assets 4,966 4,448 Fixed assets Long-term debt 13,644 12,145 Property, plant, and 24,688 22,846 Other long-term liabilities 3,068 2,968 equipment Intangible assets 2,815 2,664 Total liabilities 20,126 18,667 (goodwill) Other long-term assets 2,994 3,110 Total shareholders' equity 15,337 14,401 Total assets 35,463 33,068 Total liabilities and shareholders' equity 35,463 33,068 In 2012 McDonald's had capital expenditures of $3,060. 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
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text: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
Costs
Depreciation
27,578
17,580
1,413
Earnings before interest and taxes
8,585
(EBIT)
Interest expense
528
Pretax income
8,057
Taxes
2,636
Net income
5,421
BALANCE SHEET OF MCDONALD'S CORP., 2012
(Figures in $ millions)
Liabilities and Shareholders'
Assets
2012
2011
equity
2012
2011
Current assets
Current liabilities
Cash and marketable
2,347
2,347 Debt due for repayment
400
securities
Receivables
1,386
1,346
Accounts payable
3,414
3,154
Inventories
133
128
Total current liabilities
3,414
3,554
Other current assets
1,100
627
Total current assets
4,966
4,448
Fixed assets
Long-term debt
13,644
12,145
Property, plant, and
24,688
22,846 Other long-term liabilities
3,068
2,968
equipment
Intangible assets
2,815
2,664 Total liabilities
20,126
18,667
(goodwill)
Other long-term assets
2,994
3,110
Total shareholders' equity
15,337
14,401
Total assets
35,463
33,068
Total liabilities and shareholders'
equity
35,463
33,068
In 2012 McDonald's had capital expenditures of $3,060.
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
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