Financial & Managerial Accounting
Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 11, Problem 4ADM

Hilton and Marriott: Times interest earned

Hilton Worldwide Holdings, Inc. and Marriott International, Inc. are two of the largest hotel operators in the world. Selected financial information from recent income statements for both companies follows (in millions):

Hilton Marriott
Operating income $1,673 $1,159
Interest expense 618 115
Other expense items 92 44
Income before income taxes $1,147 $1,088
Income tax expense 465 335
Net income $ 682 $ 753

A. Compute the times interest earned ratio for each company. (Round to one decimal place.)

B. Which company appears to better protect creditor interest? Why?

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Financial & Managerial Accounting

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