Question

The 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	27,572
Costs	17,574
Depreciation	1,407
Earnings before interest and taxes (EBIT)	8,591
Interest expense	522
Pretax income	8,069
Taxes	2,624
Net income	5,445

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		2,341				2,341			Debt due for repayment		—				382
Receivables		1,380				1,340			Accounts payable		3,408				3,148
Inventories		127				122			Total current liabilities		3,408				3,530
Other current assets		1,094				621
Total current assets		4,942				4,424
Fixed assets									Long-term debt		13,638				12,139
Property, plant, and equipment		24,682				22,840			Other long-term liabilities		3,062				2,962
Intangible assets (goodwill)		2,809				2,658			Total liabilities		20,108				18,631
Other long-term assets		2,988				3,104			Total shareholders’ equity		15,313				14,395
Total assets		35,421				33,026			Total liabilities and shareholders’ equity		35,421				33,026

In 2012 McDonald’s had capital expenditures of $3,054.

a.	Calculate McDonald’s free cash flow in 2012. (Enter your answer in millions.)

Free cash flow

$  million

Answer 1

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