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The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 Net sales Costs (Figures in $ millions) Depreciation $ 27,572 17,574 1,407 Earnings before interest and taxes (EBIT) $ 8,591 Interest expense 522 Pretax income 8,069 Federal taxes (@ 21%) 1,694 Net income $ 6,375 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets Fixed assets 2022 $ 2,341 1,380 127 1,094 (Figures in $ millions) 2021 Liabilities and Shareholders' Equity 2022 2021 Current liabilities $ 2,341 Debt due for repayment 1,340 122 Accounts payable Total current liabilities $ 3,408 $ 3,408 $ 382 3,148 $ 3,530 621 $ 4,424 Long-term debt $ 22,840 Other long-term liabilities 2,658 Total liabilities $ 4,942 $ 24,682 2,809 2,988 $ 35,421 $ 33,026 Total liabilities and shareholders' equity 3,104 Total shareholders' equity Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets In 2022 Quick Burger had capital expenditures of $3,054. a. Calculate Quick Burger's free cash flow in 2022. Note: Enter your answer in millions. $ 13,638 3,062 $ 20,108 15,313 $ 35,421 $ 12,139 2,962 $ 18,631 14,395 $ 33,026 b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) Note: 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? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number. Answer is complete but not entirely correct. a. Free cash flow $ 4,728 million b. Additional tax $ 109.62 million c. Free cash flow $ 4,728 million

The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 Net sales Costs (Figures in $ millions) Depreciation $ 27,572 17,574 1,407 Earnings before interest and taxes (EBIT) $ 8,591 Interest expense 522 Pretax income 8,069 Federal taxes (@ 21%) 1,694 Net income $ 6,375 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets Fixed assets 2022 $ 2,341 1,380 127 1,094 (Figures in $ millions) 2021 Liabilities and Shareholders' Equity 2022 2021 Current liabilities $ 2,341 Debt due for repayment 1,340 122 Accounts payable Total current liabilities $ 3,408 $ 3,408 $ 382 3,148 $ 3,530 621 $ 4,424 Long-term debt $ 22,840 Other long-term liabilities 2,658 Total liabilities $ 4,942 $ 24,682 2,809 2,988 $ 35,421 $ 33,026 Total liabilities and shareholders' equity 3,104 Total shareholders' equity Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets In 2022 Quick Burger had capital expenditures of $3,054. a. Calculate Quick Burger's free cash flow in 2022. Note: Enter your answer in millions. $ 13,638 3,062 $ 20,108 15,313 $ 35,421 $ 12,139 2,962 $ 18,631 14,395 $ 33,026 b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 21%.) Note: 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? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number. Answer is complete but not entirely correct. a. Free cash flow $ 4,728 million b. Additional tax $ 109.62 million c. Free cash flow $ 4,728 million

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 19BEA
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The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 Net sales Costs Depreciation (Figures in $ millions) Earnings before interest and taxes (EBIT) Interest expense Pretax income $ 27,572 17,574 1,407 $ 8,591 522 8,069 Federal taxes (@ 21%) Net income 1,694 $ 6,375 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) 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 2022 2021 Liabilities and Shareholders' Equity Current liabilities 2022 2021 $ 2,341 $ 2,341 Debt due for repayment 1,380 127 1,094 $ 4,942 1,340 Accounts payable 122 Total current liabilities $ 3,408 $ 3,408 $ 382 3,148 $ 3,530 621 $ 4,424 Long-term debt $ 24,682 2,809 2,988 $ 22,840 Other long-term liabilities 2,658 Total liabilities 3,104 Total shareholders' equity $ 35,421 $ 33,026 Total liabilities and shareholders' equity $ 13,638 3,062 $ 20,108 15,313 $ 35,421 $ 12,139 2,962 $ 18,631 14,395 $ 33,026 In 2022 Quick Burger had capital expenditures of $3,054. a. Calculate Quick Burger's free cash flow in 2022. Note: 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%.) Note: 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? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number. Answer is complete but not entirely correct. a. Free cash flow $ 4,728 million b. Additional tax $ 109.62 million c. Free cash flow $ 4,728 million
Transcribed Image Text:The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2022. INCOME STATEMENT OF QUICK BURGER CORPORATION, 2022 Net sales Costs Depreciation (Figures in $ millions) Earnings before interest and taxes (EBIT) Interest expense Pretax income $ 27,572 17,574 1,407 $ 8,591 522 8,069 Federal taxes (@ 21%) Net income 1,694 $ 6,375 BALANCE SHEET OF QUICK BURGER CORPORATION, 2022 (Figures in $ millions) 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 2022 2021 Liabilities and Shareholders' Equity Current liabilities 2022 2021 $ 2,341 $ 2,341 Debt due for repayment 1,380 127 1,094 $ 4,942 1,340 Accounts payable 122 Total current liabilities $ 3,408 $ 3,408 $ 382 3,148 $ 3,530 621 $ 4,424 Long-term debt $ 24,682 2,809 2,988 $ 22,840 Other long-term liabilities 2,658 Total liabilities 3,104 Total shareholders' equity $ 35,421 $ 33,026 Total liabilities and shareholders' equity $ 13,638 3,062 $ 20,108 15,313 $ 35,421 $ 12,139 2,962 $ 18,631 14,395 $ 33,026 In 2022 Quick Burger had capital expenditures of $3,054. a. Calculate Quick Burger's free cash flow in 2022. Note: 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%.) Note: 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? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole number. Answer is complete but not entirely correct. a. Free cash flow $ 4,728 million b. Additional tax $ 109.62 million c. Free cash flow $ 4,728 million
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