eBook Calculator Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 2012. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2012 and 2011 2012 2011 Retained earnings, January 1 $3,704,000 $3,264,000 Net income $ 600,000 $ 550,000 Dividends: On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Increase in retained earnings $ 490,000 $ 440,000 Retained ednings, December 31 $4,194,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 2011 2012 2011 Sales $ 10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) Gross profit $ 4,850,000 $ 4,550,000 Selling expenses $ (2,170,000) $ 2,000,000) eBook Calculator Increase in retained earnings Retained earnings, December 31 $ 490,000 $4,194,000 $ 440,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 2041 20Y2 2011 Sales $ 10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) Gross profit $ 4,850,000 $ 4,550,000 Selling expenses $(2,170,000) $ 2,000,000) Administrative expenses (1,627,500) (1,500,000) Total operating expenses $(3,797,500) $ (3,500,000) Operating ircome $ 1,052,500 $ 1,050,000 other revenue and expense: Other revenue 99,500 20,000 Other expense interest) (132,000) (120,000) Income before income tax expense $ 1,020,000 $ 950,000 Income tax expense (420,000) (400,000) Net income $ 600,000 $ 550,000 Analyze and compare Marriott and Hyatt Marriott International, Inc. (MAR), and Hyatt Hotels Corporation (H) are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions): Marriott Hyatt Operating profit before other revenue and interest $1,368 $299 Other revenue (expense) 50 66 Interest expense (234) (76) Income before income tax expense $1,184 $289 Income tax expense (404) (85) Net income $ 780 $204 Balance sheet information is as follows: Marriott Hyatt Total liabilities $18,783 $3,841 Total stockholders' equity 5,357 3,908 Total liabilities and stockholders' equity $24,140 $ 7,749 The average liabilities, average stokholders' equity, and average total assets are as follows: Marriott Hyatt Average total liabilities $14,228 $3,719 Average total stockholders' equity 883 3,951 Average total assets 15,111 7,670 1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place.) Marriott Hyatt Previous eBook Calculator TUGIES IT SLUCANOILens quicy The average liabilities, average stockholders' equity, and average total assets are as follows: Marriott Hyatt Average total abilities $14,228 $3,719 Average total stockholders' equity 883 3,951 Average total assets 15,111 7,670 1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place.) Marriott Hyatt a. Return on total assets % % b. Return on stockholders' equity % % Times interest earned d. Ratio of total liabilities to stockholders' equity 2. Which of the following statements are correct? 1. Marriott has a higher return on total assets and a higher return on stockholders' equity compared to Hyatt. 2. Hyatt's weaker performance relative to Marriott's appears to be due to its weak earnings relative to its debt level. Hyatt has less leverage than Marriott 3. The times interest eamed ratio shovd that Hyatt covers its interest charges better than Marriott; however, both companies do not have sufficient coverage. 4. Hyatt's weak earnings and low debt levels are affecting the company's ability to earn returns for stockholders. Check My Work Previous