5. Compare the ratios of Hotels A&B as provided below:

Hotel A Hotel B

Current ratio 1.5 2.2

Acid test ratio 1.3 0.9

Operating cash flow

to current liabilities 1.8 1.3

Inventory turnover 15.6 12.3

Accounts receivable

Turnover 8.3 6.1

Debt ratio 0.48 0.25

Number of time

Interest earned ratio 4.3 2.5

Profit margin 11.2% 12.3%

Operating efficiency 25.4% 18.3%

Return on equity 14.3% 10.2%

Average daily rate $50.5 $58.4

REVPAR $40.4 $37.9

Requirements:

a. Which hotel has better liquidity? Why?

b. Which hotel is more solvent? Why?

c. Which hotel is more profitable in terms of management performance. Why?

d. Which hotel has better room operation performance? Why?

e. Calculate the occupancy rates of Hotels A and B respectively.