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) $ 27,583 17,585 1,418 $ 8,580 533 Net sales Costs Depreciation Earnings before interest and taxes (EBIT) Interest expense Pretax income 8,047 1,690 Federal taxes (@ 21%) Net income $ 6,357 BALANCE SHEET OF QUICK BURGER CORP., 2019 (Figures in $ millions) Assets 2019 2018 Liabilities and Shareholders' Equity 2019 2018 Current assets Current liabilities $ 2,352 1,391 $ 2,352 1,351 Debt due for repayment Accounts payable Cash and marketable securities 415 $ 3,419 $ 3,419 Receivables 3,159 Inventories 138 133 Total current liabilities $ 3,574 Other current assets 1,105 632 Total current assets $ 4,986 $ 4,468

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) $ 27,583 17,585 1,418 $ 8,580 533 Net sales Costs Depreciation Earnings before interest and taxes (EBIT) Interest expense Pretax income 8,047 1,690 Federal taxes (@ 21%) Net income $ 6,357 BALANCE SHEET OF QUICK BURGER CORP., 2019 (Figures in $ millions) Assets 2019 2018 Liabilities and Shareholders' Equity 2019 2018 Current assets Current liabilities $ 2,352 1,391 $ 2,352 1,351 Debt due for repayment Accounts payable Cash and marketable securities 415 $ 3,419 $ 3,419 Receivables 3,159 Inventories 138 133 Total current liabilities $ 3,574 Other current assets 1,105 632 Total current assets $ 4,986 $ 4,468

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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Question

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
c. What would the company's free cash flow have been if it was all-equity financed? (Enter your answer in millions.)
Free cash flow

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)
$ 27,583
17,585
1,418
Net sales
Costs
Depreciation
Earnings before interest and taxes
Interest expense
(ЕBIT)
$ 8,580
533
Pretax income
8,047
Federal taxes (@ 21%)
1,690
Net income
$ 6,357
BALANCE SHEET OF QUICK BURGER CORP.,
2019
(Figures in $ millions)
Assets
2019
2018
Liabilities and Shareholders
Equity
2019
2018
Current assets
Current liabilities
$ 2,352
1,351
Debt due for repayment
Accounts payable
Cash and marketable securities
$ 2,352
$
$ 3,419
$ 3,419
415
3,159
$ 3,574
Receivables
1,391
Inventories
138
133
Total current liabilities
1,105
$ 4,986
Other current assets
632
Total current assets
$ 4,468
Long-term debt
Other long-term liabilities
$12,150
2,973
$18,697
14,406
Fixed assets
$13,649
Property, plant, and equipment
Intangible assets (goodwill)
Other long-term assets
3,073
$20,141
15,357
$24,693
$22,851
2,820
2,999
2,669
Total liabilities
3,115
Total shareholders' equity
Total assets
$ 35,498
$ 33,103
Total liabilities and shareholders' equity $35,498
$33,103
In 2019 Quick Burger had capital expenditures of $3,065.
a. Calculate Quick Burger's free cash flow in 2019. (Enter your answer in millions.)
Free cash flow
million

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