Comparing Starwood Hotels & Resorts and Marriott International, Inc.

The following current items, listed in alphabetical order, are taken from the consolidated balance sheets of Starwood Hotels & Resorts Worldwide, Inc. as of December 31, 2008, and Marriott International, Inc. as of January 2, 2009. (All amounts are in millions of dollars.) Any assets or liabilities with which you may not be familiar are noted parenthetically.

Starwood Hotels & Resorts Worldwide, Inc.
Accounts payable $ 171 Accounts receivable, net of allowance for doubtful accounts of $49 552 Accrued expenses (liability) 1,274 Accrued salaries, wages and benefi ts 346 Accrued taxes and other 391 Cash and cash equivalents 389 Inventories 986 Prepaid expenses and other 143 Restricted cash 96 Short-term borrowings and current maturities of long-term debt 506 Marriott International, Inc.
Accounts and notes receivable $ 898 Accounts payable 704 Accrued payroll and benefi ts (liability) 633 Cash and cash equivalents 134 Current deferred taxes, net (asset) 186 Current portion of long-term debt 120 Inventory 1,981 Liability for guest loyalty program 446 Other (asset) 169 Other payables and accruals 560 Timeshare segment deferred revenue (liability) 70 Required 1. Compute working capital and the current ratio for both companies.
2. On the basis of your answers to (1), which company appears to be more liquid?
3. Other factors affect a company’s liquidity besides working capital and current ratio. Comment on the composition of each company’s current assets and ways this composition affects liquidity.AppendixLO1