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Comprehensive profitability and solvency analysis Starwood Hotels & Resorts Worldwide Inc. (HOT) and Wyndham Worldwide Corporation (WYN) are two major owners and managers of lodging and resort properties in the United States. Financial data (in millions) for a recent year for the two companies are as follows: The average liabilities, stockholders' equity, and total assets were as follows: I. Determine the following ratios for both companies (round to one decimal place after the whole percent): A.Return on total assets b.Return on total stockholders' equity c.Times interest earned d.Debt ratio for the most recent year. e.Ratio of liabilities to stockholders' equity for the most recent year.

BuyFind

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883
BuyFind

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

Solutions

Chapter
Section
Chapter 9, Problem 9.5.1C
Textbook Problem

Comprehensive profitability and solvency analysis
Starwood Hotels & Resorts Worldwide Inc. (HOT)

and Wyndham Worldwide Corporation (WYN)

are two major owners and managers of lodging and resort properties in the United States. Financial data (in millions) for a recent year for the two companies are as follows:

Chapter 9, Problem 9.5.1C, Comprehensive profitability and solvency analysis Starwood Hotels & Resorts Worldwide Inc. (HOT) and , example  1

The average liabilities, stockholders' equity, and total assets were as follows:

Chapter 9, Problem 9.5.1C, Comprehensive profitability and solvency analysis Starwood Hotels & Resorts Worldwide Inc. (HOT) and , example  2
I. Determine the following ratios for both companies (round to one decimal place after the whole percent):
A.Return on total assets
b.Return on total stockholders' equity
c.Times interest earned
d.Debt ratio for the most recent year.
e.Ratio of liabilities to stockholders' equity for the most recent year.

Expert Solution
To determine

Introduction:

Accounting ratios are used to evaluate the financial performance of the business organisation

Profitability analysis:

Itis used to evaluate the ability of a company to generate income relative to revenue, assets, operating cost and shareholders' equity during a specific period.

Solvency analysis:

It is used to evaluate companies' ability to pay its long-term debt.It also helps the owner to determine the chances of firm's long-term survival.

To calculate: The ratios for both the companies.

Explanation of Solution

    RatiosSW
    Return on total assets782+139 8,711=0.11916+125 9,698=0.11
    Return on shareholder's equity633 2443=0.26612 1,103=0.55
    Times interest earned782+139 139=6

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Chapter 9 Solutions

Survey of Accounting (Accounting I)
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