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.
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.
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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Question
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
|
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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