Analyze and compare Marriott and Hyatt Marriott International, Inc. (MAR), and Hyatt Hotels Corporation (H) 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): Marriott Hyatt Operating profit before other revenue and interest $1,368 $299 Other revenue (expense) Interest expense 50 66 (234) (76) Income before income tax expense $1,184 $289 Income tax expense (404) (85) Net income $ 780 $204 Balance sheet information is as follows: Marriott Hyatt Total liabilities $18,783 $ 3,841 Total stockholders' equity 5,357 3,908 Total liabilities and stockholders' equity $24,140 $ 7,749 The average liabilities, average stockholders' equity, and average total assets are as follows: Marriott Hyatt Average total liabilities $14,228 $3,719 Average total stockholders' equity 883 3,951 Average total assets 15,111 7,670 1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place.) Marriott Hyatt a. Return on total assets 3.2 X % 2.6 x % b. Return on stockholders' equity 5.2 V % 88.3 c. Times interest earned 6.1 4.8 d. Ratio of total liabilities to stockholders' equity 3.5 1.0 V 2. Which of the following statements are correct? 1. Marriott has a higher return on total assets and a higher return on stockholders' equity compared to Hyatt. 2. Hyatt's weaker performance relative to Marriott's appears to be due to its weak earnings relative to its debt level. Hyatt has less leverage than Marriott. 3. The times interest earned ratio shows that Hyatt covers its interest charges better than Marriott; however, both companies do not have sufficient coverage. 4. Hyatt's weak earnings and lovw debt levels are affecting the company's ability to earn returns for stockholders.
Analyze and compare Marriott and Hyatt Marriott International, Inc. (MAR), and Hyatt Hotels Corporation (H) 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): Marriott Hyatt Operating profit before other revenue and interest $1,368 $299 Other revenue (expense) Interest expense 50 66 (234) (76) Income before income tax expense $1,184 $289 Income tax expense (404) (85) Net income $ 780 $204 Balance sheet information is as follows: Marriott Hyatt Total liabilities $18,783 $ 3,841 Total stockholders' equity 5,357 3,908 Total liabilities and stockholders' equity $24,140 $ 7,749 The average liabilities, average stockholders' equity, and average total assets are as follows: Marriott Hyatt Average total liabilities $14,228 $3,719 Average total stockholders' equity 883 3,951 Average total assets 15,111 7,670 1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place.) Marriott Hyatt a. Return on total assets 3.2 X % 2.6 x % b. Return on stockholders' equity 5.2 V % 88.3 c. Times interest earned 6.1 4.8 d. Ratio of total liabilities to stockholders' equity 3.5 1.0 V 2. Which of the following statements are correct? 1. Marriott has a higher return on total assets and a higher return on stockholders' equity compared to Hyatt. 2. Hyatt's weaker performance relative to Marriott's appears to be due to its weak earnings relative to its debt level. Hyatt has less leverage than Marriott. 3. The times interest earned ratio shows that Hyatt covers its interest charges better than Marriott; however, both companies do not have sufficient coverage. 4. Hyatt's weak earnings and lovw debt levels are affecting the company's ability to earn returns for stockholders.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Analyze and compare Marriott and Hyatt
Marriott International, Inc. (MAR), and Hyatt Hotels Corporation (H) are two major ovwners 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):
Marriott Hyatt
Operating profit before other revenue and interest
$1,368 $299
Other revenue (expense)
50
66
Interest expense
(234) (76)
Income before income tax expense
$1,184 $289
Income tax expense
(404)
(85)
Net income
$ 780 $204
Balance sheet information is as follows:
Marriott
Нyatt
Total liabilities
Total stockholders' equity
$18,783
$ 3,841
5,357
3,908
Total liabilities and stockholders' equity
$24,140
$ 7,749
The average liabilities, average stockholders' equity, and average total assets are as follows:
Marriott
Нyatt
Average total liabilities
$14,228
$3,719
Average total stockholders' equity
Average total assets
883
3,951
15,111
7,670
1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place.)
Marriott
Нyatt
a. Return on total assets
3.2 X %
2.6 | Х %
b. Return on stockholders' equity
88.3
%
5.2
c. Times interest earned
б.1
4.8
d. Ratio of total liabilities to stockholders' equity
3.5
1.0
2. Which of the following statements are correct?
1. Marriott has a higher return on total assets and a higher return on stockholders' equity compared to Hyatt.
2. Hyatt's weaker performance relative to Marriott's appears to be due to its weak earnings relative to its debt level. Hyatt has less leverage than Marriott.
3. The times interest earned ratio shows that Hyatt covers its interest charges better than Marriott; however, both companies do not have sufficient coverage.
4. Hyatt's weak earnings and low debt levels are affecting the company's ability to earn returns for stockholders.
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