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?