Reviewing An Acid Test For Hilton

1709 Words Oct 3rd, 2015 7 Pages
On paper, 2014 for Hilton appears to have been a successful year; they were able to expand the brand while also adding additional rooms, there was an increase in occupancy over 2013 and revenues were up. While there were noted improvements, for several key indicators, over the company’s 2013 financial and operational results, the question still remains as to whether or not there may have been additional opportunity for financial improvement.
In 2014 Hilton saw a $.005 cent decrease in their ability to meet their short term debts. While in the scope of the overall operation this decrease may not seem significant, when related to Hilton’s low current ratio of 1.107, this result does not provide Hilton much cushion in meeting its current liabilities. This may give pause to potential creditors who may question their ability to meet their obligations. This also indicates that Hilton may benefit from varying their financing activities in order to achieve maximum return, obtaining new equity, or, working toward reducing their liabilities.
In reviewing an acid test for Hilton, it’s important to note that the company’s results of .833 for 2014 were worse than they were in 2013. This tells us that, if put in a situations where Hilton needed to liquidate its quick assets in order to satisfy it’s current liabilities, they would be unable to do so which is mainly due to Hilton’s inventory comprising of 27% of the company’s total assets. This information, in conjunction with results…
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