Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. What is the average debt ratio and the ratio of average liabilities to average stockholders' equity for Years 1, 2, and 3? 3. Comment

image text in transcribed
2. What is the average debt ratio and the ratio of average liabilities to average stockholders' equity for Years 1, 2, and 3? 3. Comment on the results in (1) and (2). Case 9-5 Comprehensive profitability and solvency analysis Starwood Hotels & Resorts Worldwide Inc. (HOT) and Wyndham Worldwide Corporation (WYN) are two major owners and managers of lodging and resort properties in the United States. Fi- nancial data (in millions) for a recent year for the two companies are as follows: Starwood Wyndham Income statement data: Interest expense $ 139 $ 125 Income before income tax 782 916 Net income 633 612 Balance sheet data: Total assets $8,659 $9,716 Total liabilities 7,134 8.766 Total stockholders' equity 1,525 950 The average liabilities, stockholders' equity, and total assets were as follows: Starwood Wyndham Average total assets $8,711 $9.698 Average total liabilities 6,268 8,595 Average total stockholders' equity 2,443 1,103 1. Determine the following ratios for both companies (round to one decimal place after the whole percent): a. Return on total assets b. Return on total stockholders' equity c. Times interest earned d. Debt ratio for the most recent year. e. Ratio of liabilities to stockholders' equity for the most recent year. 2. Analyze and compare the two companies, using the information in (1)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing and Assurance Services A Systematic Approach

Authors: William Messier Jr, Steven Glover, Douglas Prawitt

10th edition

77732502, 978-0077732509

More Books

Students also viewed these Accounting questions