PROF SocratesThe 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 | 27,587 | |
| Costs | 17,589 | |
| Depreciation | 1,422 | |
| Earnings before interest and taxes (EBIT) | 8,576 | |
| Interest expense | 537 | |
| Pretax income | 8,039 | |
| Taxes | 2,654 | |
| Net income | 5,385 | |
| BALANCE SHEET OF MCDONALD’S CORP., 2012 | |||||||||||||||||
| (Figures in $ millions) | |||||||||||||||||
| Assets | 2012 | 2011 | Liabilities and Shareholders' equity | 2012 | 2011 | ||||||||||||
| Current assets | Current liabilities | ||||||||||||||||
| Cash and marketable securities | 2,356 | 2,356 | Debt due for repayment | — | 427 | ||||||||||||
| Receivables | 1,395 | 1,355 | Accounts payable | 3,423 | 3,163 | ||||||||||||
| Inventories | 142 | 137 | Total current liabilities | 3,423 | 3,590 | ||||||||||||
| Other current assets | 1,109 | 636 | |||||||||||||||
| Total current assets | 5,002 | 4,484 | |||||||||||||||
| Fixed assets | Long-term debt | 13,653 | 12,154 | ||||||||||||||
| Property, plant, and equipment | 24,697 | 22,855 | Other long-term liabilities | 3,077 | 2,977 | ||||||||||||
| Intangible assets (goodwill) | 2,824 | 2,673 | Total liabilities | 20,153 | 18,721 | ||||||||||||
| Other long-term assets | 3,003 | 3,119 | Total shareholders’ equity | 15,373 | 14,410 | ||||||||||||
| Total assets | 35,526 | 33,131 | Total liabilities and shareholders’ equity | 35,526 | 33,131 | ||||||||||||
| In 2012 McDonald’s had capital expenditures of $3,069. |
| 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.) |
please show all workings for this answer.
question 2
What would be the marginal and average tax rates for a married couple with taxable income of $90,900? For an unmarried taxpayer with the same income? Use Table 3.7.(Do not round intermediate calculations. Enter the marginal tax rates as a whole percent. Enter the average tax rates as a percent rounded to 2 decimal places.) |
(please show how you arrive at your answer for this question also)
| Marginal tax rate | Average tax rate | |
| Married couple | % | % |
| Single person | % | % |
| Additional tax | $ million |
10 years ago
