INCOME STATEMENT OF QUICK BURGER CORP., 2016 (Figures in s millions) Net sales C
ID: 2615264 • Letter: I
Question
INCOME STATEMENT OF QUICK BURGER CORP., 2016 (Figures in s millions) Net sales Costs Depreciation Earnings before interest and taxes (EBIT) Interest expense Pretax income Taxes Net income $27,567 17,569 1,402 $8,596 517 8,079 2,614 5,465 BALANCE SHEET OF QUICK BURGER CORP., 2016 2016 2,336 2,336 Debt due for repayment (Pigures in millions) 2015 Liabilities and Shareholders Equity 2016 2015 Assets Current assets Cash and marketable securities Receivables Inventories Other current assets Total current assets Pixed assets Property, plant, and equipment Intangible assets (goodwill) Other long-term assets Total assets Current 1iabilities 367 3.4033 143 3,510 1,375 1,335 Accounts payable 3,403 122 1,089 4,922 117 Total current liabilities 616 4, 404 13,633 12,134 3,057 2,957 20,093 18,601 15.293 14,390 Long-term debt 24,677 22,835 Other long-term liabilities 2,804 2,653 Total liabilities 2,983 3,099 Total shareholders' equity 35,386 32,991 Total liabilities and shareholders equity 35,386 32,991Explanation / Answer
a.
Cash flow from operations = Net income + interest + depreciation – Additions to net working capital
Free cash flow = cash flow from operations – capital expenditures
Additions to net working capital = (3403 - 3143) -(367 - 0) - (1375 - 1335) - (122 ? 117) - (1089 - 616) = -625
Cash flow from operations = 5,465 + 517 + 1402 - 625 = 6759
Capital expenditures = $3,049
Free cash flow = $6759 – 3,049 = $3710
b.Tax increase due to $534 million more in taxable income $186.90 = (534 × 0.35)
c. Additions to net working capital = (3403 - 3143) -(367 - 0) - (1375 - 1335) - (122 ? 117) - (1089 - 616) = -625
Cash flow from operations = 5,465 + 0 + 1402 - 625 = 6242
Capital expenditures = $3,049
Free cash flow = $6242 – 3,049 = $3193