determine the following ratios for both companies, then based on the information analvze and compare the two companies' solvency and profitability. Ratios: Return on total assets Return on stockholders' equity Times interest earned Ratio of total liabilities to stockholders' equity.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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determine the following ratios for both companies, then based on the information analvze and compare the two companies' solvency and profitability. Ratios: Return on total assets Return on stockholders' equity Times interest earned Ratio of total liabilities to stockholders' equity.
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):
Operating profit before other expenses and Interest
Other revenue
Interest expense
Income before Income tax expense
Income tax expense
Net Income
Balance sheet information is as follows:
Total liabilities
Total stockholders' equity
Total liabilities and stockholders' equity
Marriott
$2,366
319
(340)
$2,345
438
$1,907
Average total liabilities
Average total stockholders' equity
Average total assets
Marriott
$21,471
2,225
$23,696
Marriott
$20,868
2,903
23,771
Hyatt
$332
695
(76)
$951
182
$769
Hyatt
$3,966
The average liabilities, average stockholders' equity, and average total assets are as follows:
Hyatt
$3,848
3,760
7,608
3,677
$7,643
Transcribed Image Text: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): Operating profit before other expenses and Interest Other revenue Interest expense Income before Income tax expense Income tax expense Net Income Balance sheet information is as follows: Total liabilities Total stockholders' equity Total liabilities and stockholders' equity Marriott $2,366 319 (340) $2,345 438 $1,907 Average total liabilities Average total stockholders' equity Average total assets Marriott $21,471 2,225 $23,696 Marriott $20,868 2,903 23,771 Hyatt $332 695 (76) $951 182 $769 Hyatt $3,966 The average liabilities, average stockholders' equity, and average total assets are as follows: Hyatt $3,848 3,760 7,608 3,677 $7,643
Expert Solution
Step 1

Ratio Analysis :— Ratio analysis is the process of Determination and Interpretation numerical relationship based on Financial Statement.

Profitability Ratio :— The ratios given an indication of the efficiency with which the operations of Business are carried on. 

Solvency ratio :— Solvency ratio is a key metric used to measure an enterprise's ability to meet its long-term debt obligations

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