The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2016.
Question:
The following table shows an abbreviated income statement and balance sheet for Quick Burger Corporation for 2016.
INCOME STATEMENT OF QUICK BURGER CORP., 2016
(Figures in $ millions)
Net sales ............................................................. $27,567
Costs .................................................................. 17,569
Depreciation ........................................................... 1,402
Earnings before interest and taxes (EBIT) ........................$8,596
Interest expense .......................................................... 517
Pretax income ......................................................... 8,079
Taxes .................................................................... 2,614
Net income .............................................................$5,465
In 2016 Quick Burger had capital expenditures of $3,049.
a. Calculate Quick Burger's free cash flow in 2016.
b. If Quick Burger was financed entirely by equity, how much more tax would the company have paid? (Assume a tax rate of 35%.)
c. What would the company's free cash flow have been if it was all-equity financed?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
Step by Step Answer:
Fundamentals of Corporate Finance
ISBN: 978-1259722615
9th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus