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Case 9-5 Comprehensive Profitability and Solvency Analysis Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) are two major owners and managers
Case 9-5 Comprehensive Profitability and Solvency Analysis Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) are two major owners and managers of lodging and resort properties in the United States. Financial data (in millions) for a recent year for the two companies are as follows: Starwood Marriott Income statement data: Interest expense $ 111 $ 340 Income before income tax 669 2,345 Net income 489 1,907 Balance sheet data: Total assets $8,268 $23,696 Total liabilities 6,969 21,471 Total stockholders' equity 1,299 2,225 The average liabilities, stockholders' equity, and total assets were as follows: Starwood Marriott Average total assets $8,464 $23,771 Average total liabilities 7,050 20,867 Average total stockholders' equity 1,414 2,904 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 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)
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