Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions): 1 MarriottHyatt2Operating profit before other expenses and interest$677.00$39.003Other income (expenses)54.00118.004Interest expense(180.00)(54.00)5Income before income taxes$551.00$103.006Income tax expense93.0037.007Net income$458.00$66.00 Balance sheet information is as follows: 1 MarriottHyatt2Total liabilities$7,398.00$2,125.003Total stockholders’ equity1,585.005,118.004Total liabilities and stockholders’ equity$8,983.00$7,243.00 The average liabilities, average stockholders’ equity, and average total assets are as follows: MarriottHyattAverage total liabilities$7,095$2,132Average total stockholders’ equity1,3645,067Average total assets8,4587,199 1.Determine the following ratios for both companies: A. Return on total assets, B. Return on stockholders’ equity, C. Times interest earned, D. Ratio of total liabilities to stockholders’ equity. Round ratios and percentages to one decimal place.2.Based on the information in (1), analyze and compare the two companies’ solvency and profitability.

The profitability of any business can be ascertained through its net income and it can be compared…

Answered: Determine the following ratios for both…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4MAD: Marriott International, Inc. (MAR), and Hyatt Hotels Corporation (H) are two major owners and...

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Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions):

1		Marriott	Hyatt
2	Operating profit before other expenses and interest	$677.00	$39.00
3	Other income (expenses)	54.00	118.00
4	Interest expense	(180.00)	(54.00)
5	Income before income taxes	$551.00	$103.00
6	Income tax expense	93.00	37.00
7	Net income	$458.00	$66.00

Balance sheet information is as follows:

1		Marriott	Hyatt
2	Total liabilities	$7,398.00	$2,125.00
3	Total stockholders’ equity	1,585.00	5,118.00
4	Total liabilities and stockholders’ equity	$8,983.00	$7,243.00

The average liabilities, average stockholders’ equity, and average total assets are as follows:

	Marriott	Hyatt
Average total liabilities	$7,095	$2,132
Average total stockholders’ equity	1,364	5,067
Average total assets	8,458	7,199

1.	Determine the following ratios for both companies: A. Return on total assets, B. Return on stockholders’ equity, C. Times interest earned, D. Ratio of total liabilities to stockholders’ equity. Round ratios and percentages to one decimal place.
2.	Based on the information in (1), analyze and compare the two companies’ solvency and profitability.

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