Hello, could someone assist me with answering these questions?

D E 1. Many of Choice Hotels Income Statement accounts have remained consistent for the past 3 years. However, there is a notable difference from 2017 to 2018 in the G H Depreciation Amortization expense. What caused this difference? Hint: See page 44 in the 10-K report. page 44 of the 10-K report. 2. In comparing year-over-year expenses, there is a new expense reported in 2018 called Impairment of Goodwill. What is this expense and why did it occur? Hint: See 3. There is a significant decrease in income taxes in 2018 from previous years. What caused this decrease in income taxes? Hint: See page 45 of the 10-K report. 4. The largest item in revenue and in expense is Marketing and reservation system. What are these two items and why are the numbers different? Hint: See page 56 in the MD&A 5. What are the two most significant trends based on your horizontal analysis over this 3 year period? Explain your reasons for your selections.Consolidated Statements of Cash Flows Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net income $216,355,000 $122,327,000 $106,712,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization $14,330,000 $6,680,000 $6,996,000 Depreciation and amortization - marketing and reservation system $19,597,000 $20,609,000 $20,663,000 Franchise agreement acquisition cost amortization $9,239,000 $7,191,000 $6,423,000 Impairment of goodwill $4,289,000 SO Gain on disposal of assets, net $56,000 $237,000 $571,000 Provision for bad debts, net $10,542,000 $5,514,000 $3,365,000 Non-cash stock compensation and other charges $ 15,986,000 $22,857,000 $15,346,000 Non-cash interest and other investment (income) loss $3,695,000 $772,000 $1,059,000 Deferred income taxes $3,510,000 $57,106,000 $29,723,000 Equity in net losses from unconsolidated joint ventures, less distributions received $7,389,000 $6,579,000 $1,025,000 Franchise agreement acquisition cost, net of reimbursements $52,929,000 $30,638,000 $17,410,000 Change in working capital and other, net of acquisition -$2,031,000 $40,158,000 $38,150,000 Net cash provided by operating activities $242,896,000 $257,374,000 $152,035,000 CASH FLOWS FROM INVESTING ACTIVITIES Investment in property and equipment $47,673,000 $23,437,000 -$25,191,000 Investment in intangible assets $1,803,000 -$2,517,000 -$2,580,000 Proceeds from sales of assets $3,053,000 $1,000,000 $11,462,000 Asset acquisition, net of cash acquired $3,179,000 so -$28,583,000 Business acquisition, net of cash acquired -$231,317,000 SO -$1,341,000 Contributions to equity method investments $9,604,000 -$50,554,000 -$34,661,000 Distributions from equity method investments $1,429,000 $4,569,000 $3,700,000 Purchases of investments, employee benefit plans $2,895,000 $2,447,000 $1,661,000 Proceeds from sales of investments, employee benefit plans $2,825,000 $2,245,000 $1,911,000 Issuance of notes receivable -$36,045,000 -$19,738,000 -$32,604,000 Collections of notes receivable $4,997,000 $655,000 $11,070,000 Other items, net $1,040,000 $109,000 $11,000 Net cash used in investing activities $321,252,000 $90,115,000 -$98,467,000 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long term debt $9,037,000 SOels Works with franchisees who operate hotels under one of the Choice Hotels' brands such as Can B Treasury stock, at cost; 39,386,431 and 38,385,670 shares at C E F G H J K L December 31, 2018 and December 31, 2017, respectively -$1,187.625 -$1,064.573 Retained earnings $795,178 Total shareholders' deficit $627.272 -$183,772 -$258,601 Total liabilities and shareholders' deficit $1,138,370 $995,191 Questions: 1. Choice Hotels works with franchisees who operate hotels under one of the Choice Hotels' brands such as Cambria Hotels, Sleep Inn, and Econo Lodge. The Balance Sheet lists an account called notes receivable. One is in Current assets and the other in long term assets. What is notes receivable and why was there a 2. On the balance sheet, there is an item called Accumulated Other Comprehensive Loss. This account is commonly used to record an unrealized loss. What agreement did the company enter that caused this unrealized loss? Hint: See page 100 of the 10-K report. 3. Treasury Stock is a negative account that is almost as large as the Total Assets, What would have been the Total Shareholders' Equity if there had been no purchases of Treasury Stock? 4. What are the two most significant trends based on your horizontal analysis over this 2 year period? Explain your reasons for your selections.Horizontal Analysis Consolidated Balance Sheets - USD ($] $ in 12 Months Ended Thousands Dec. 31, 20 Dec. 31, 201 $ Change 2017 to 20% Change 2017 to 2018 Current assets Cash and cash equivalents $26.642 $235,336 Receivables (net of allow ance for doubtful accounts of $15,305 and $12,221, respectively] $138,018 Income taxes receivable $125,870 $10,122 Notes receivable, net of allow ances $0 $13,256 Other current assets $36,759 $32.243 Total current assets $25,967 $243.784 $400,429 Property and equipment, at cost, net Goodwill $127.535 $83,374 $168,996 $80,757 Intangible assets, net $271,188 $100,492 Notes receivable, net of allowances $83,440 $80,136 Investments, employee benefit plans, at fair value $19,398 $20,838 Investments in unconsolidated entities $109,016 $134,226 Deferred income taxes $30,613 427.224 Other assets $64.400 Total assets 467.715 $1.138,370 995,191 Current liabilities Accounts payable $73,511 $67.839 Accrued expenses and other current liabilities $92,651 $84.315 Deferred Revenue $67.614 $52.142 Liability for guest loyalty program 83,566 $79,123 Current portion of long-term debt $1,097 $1,232 Total current liabilities $318,439 $284,651 Long-term debt $ 753,514 $725.292 Long-term portion $ 110.278 198.459 Deferred compensation and retirement plan obligations $24.212 $25.566 Income taxes payable $26.276 $29,041 Deferred income taxes $0 $39 Liability for quest loyalty program $52,327 $48.701 Other liabilities $37,096 $42,043 Total liabilities $1,322,142 $1,253.792 Commitments and Contingencies Common stock, $0.01par value; 160,000,000 shares authorized; 95,065,638 shares issued at December 31, 2018 and December 31, 2017: 55,679,207 and 56,679,968 shares outstanding at December 31, 2018 and December 31, 2017, 195 $951 Additional paid-in-capital $213.170 $162.448 Accumulated other comprehensive loss -$5,446 -$4.699 Treasury stock, at cost: 39,386,431 and 38,385,670 shares at December 31, 2013 and December 31, 2017, respectively -$1,187.625 -$1,064.573 Retained earnings $795,178 $627 272 Total shareholders' deficit -$183,772 $258,601 Total liabilities and shareholders' deficit $1,138.370 $985,191Horizontal Analysis 12 Months Ended Consolidated Statements of Income - USD ($) Dec. 31, 2018 REVENUES: Dec. 31, 2017 Dec. 31, 2016 $ Change 2017 to 2018% Change 2017 to 2018$ Change 2016 to 201 % Change 2016 to 2 Royalty fees $376,676,000 Initial franchise and relicensing fees $341,745,000 $317,699,000 $26,072,000 $23,038,000 Procurement services $19,720,000 $52,088,000 $40,451,000 Marketing and reservation system $35,844,000 $543,677,000 $499,625,000 Other $409,120,000 $42,791,000 $36,438,000 $25,526,000 Total revenues $1,041,304,000 $941,297,000 $807,909,000 OPERATING EXPENSES: Selling, general and administrative $170,027,000 $165,821,000 $154,720,000 Depreciation and amortization $14,330,000 $6,680,00 $6,996,000 Marketing and reservation system $534,266,000 $479,400,000 $459,765,000 Total operating expenses $718,623,000 $651,901,000 $621,481,000 Impairment of goodwill -$4,289,000 SO Gain on sale of assets, net $82,000 $257,000 $627,000 Operating income $318,474,000 $289,653,000 $187,055,000 OTHER INCOME AND EXPENSES, NET: Interest expense $45,908,000 $45,039,000 $44,446,000 Interest income $7,452,000 $5,920,000 -$3,535,000 Other (gain) loss $ 1,437,000 $3,229,000 $1,504,000 Equity in net (income) loss of affiliates $5,323,000 $4,546,000 -$492,000 Total other income and expenses, net $45,216,000 $40,436,000 $38,915,000 Income before income taxes $273,258,000 $249,217,000 $148,140,000 Income taxes $56,903,000 $126,890,000 $41,428,000 Net income $216,355,000 $122,327,000 $106,712,000 Basic earnings per share: Basic earnings per share (in dollars per share) $3.83 $2.16 $1.90 Diluted earnings per share (in dollars per share $3.80 $2.15 $1.89 Questions: 1. Many of Choice Hotels Income Statement accounts have remained consistent for the past 3 years. However, there is a notable difference from 2017 to 2018 in the Depreciation Amortization expense. What caused this difference? Hint: See page 44 in the 10-K report.5. On the bottom of Page 38, it states, "Our Company focuses on two key goals:" What are the two key goals? Answer:3. Choice Hotels is a company that has grown to over $1 billion in assets in 2018. So $100 million is a big number for Choice. Also on page 5, how much did Choice Hotels pay as a Special Dividend in 2012? Answer: Note: The Business section continues to page 23, where the Risk section begins. A consultant would be well advised to read all of both sections. The items in 10-K Risk section are designed to give full disclosure. Of more interest is a section starting on page 37: Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. (MD&A) This is where management tells shareholders what happened and why. The following questions apply to the MD&A. 4. What happened on February 1, 2018? Hint: You may find it useful to read Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Pages 37 and 51 are especially useful. Item 25 on Page 106 gives details. Answer:Open the 10-K document, chh1231201810-k.htm and read pages 4 and 5. This is the overview of the business. Answer the following questions: 1. What is the Company's primary business? Answer: 2. On page 5, there is a sentence that reads in part, "Historically, we have returned value to our shareholders in two primary ways:" What are the two ways? Answer:Choice Hotels 10-K In Project 2, you will learn how to access US Securities and Exchange Commission public information about companies. You will also learn how to complete a horizontal analysis and to calculate and analyze ratios. Start by looking up the 10-K for Choice Hotels (CHH) for year 2018 on the SEC website. Follow these steps: 1. Go to www.SEC.gov. 2. At the top on the right, click Company Filings. 3. In the fast search box, enter the Ticker Symbol for Choice Hotels, CHH. 4. Click Search 5. EDGAR search results will appear. Notice the name and address for Choice Hotels. Also notice the box that reads Filter Results: Filing Type. Enter "10-K" and click Search. 6. You should see a 10-K with a filing date of 2019-02-26. This is the latest available at the time this project was developed. 7. There are two available formats of this 10-K data, and we will use the Documents to answer the questions. You will use the data provided in the worksheets to complete the Ratio Analysis and to answer related questions. 8. Complete the horizontal analysis of financial statements by filling in each grey box. 9. Answer all questions on each tab in this workbook. Note: Quarterly Financial Statements are not audited. Only annual financial statements are audited by a public accounting firm.A B C D E F G H I K 3 Net Profit Margin 2018 2017 Net Income Total Revenues Calculate Net Profit Margin Above 8% 4 Basic Earning Power (BEP) 2018 2017 EBIT Total Assets, Multiply by 1,000 to compare Calculate BEP Above 12% Asset Management Ratios 5 Evaluating Receivables: Days Sales Outstanding a. Calculate Average Daily Sales Total revenues 365 days 365 365 Average Sales per day Receivables (net ......) X 1000 Average Sales per Day b. Calculate Days Sales Outstanding 50 days or lessInstructions M 1. Please enter the data from the previous tabs by clicking on the cell and typing = and then clicking on the desired cell. For example to enter Net Income for 2018 type = and go to the income statement tab and click on cell 127. 2. Complete the calculations. Be careful, only Balance sheet numbers are in thousands. Income Statement and Cash Flow Statement numbers are as presented. Brigham, E; Ehrhardt, M. (2017). Chapter 3. Financial Management, Theory and Practice. Boston, MA: Cengage Learning Solvency Ratios 1 Ability to Pay Interest: Times Interest Earned Ratio Suggested level for a good result a. Calculate Earnings before Interest and Taxes (EBIT) 2018 2017 Add: Operating income Depreciation and amortization equals EBIT Interest b. Calculate Times Interest Earned Ratio EBIT / Interest Abobe 4.5 Leverage Ratios 2 Market Debt Ratio 2018 a. Find Market Value of Equity from "Market Cap" in Yahoo Finance b. Calculate Total Debt + Market Value of Equity Add: Total Debt Market Value of Equity Total: Total Debt + Market Value of Equity c. Calculate Market Debt Ratio Below .25 or 25% Profitability Ratios 2017 3 Net Profit Margin 2018 Net Income Total Revenues Above 8% Calculate Net Profit Margin 2018 2017 4 Basic Earning Power (BEP) EBIT27 Purchases of investments, employee benefit plans -$2,895,000 -$2,447,000 -$1,661,000 Proceeds from sales of investments, employee benefit 28 plans $2,825,000 $2,245,000 $1,911,000 29 Issuance of notes receivable -$36,045,000 -$19,738,000 -$32,604,000 30 Collections of notes receivable $4,997,000 $655,000 $11,070,000 31 Other items, net -$1,040,000 $109,000 $11,000 32 Net cash used in investing activities -$321,252,000 -$90,115,000 -$98,467,000 33 CASH FLOWS FROM FINANCING ACTIVITIES 34 Proceeds from issuance of long term debt $9,037,000 $0 10 Net (repayments] borrowings pursuant to revolving 35 credit facilities $20,600,000 -$115,003,000 $25,795,000 36 Principal payments on long-term debt -1603,000 -$660,000 -4988,000 37 Proceeds from other debt agreements $0 $0 1550,000 38 Debt issuance costs -$2,590,000 $0 -$284,000 39 Purchases of treasury stock -$148,679,000 -$9,807,000 -$35,926,000 40 Dividends paid -$48,715,000 -$48,651,000 -$46,182,000 41 Proceeds from transfer of interest in notes receivable $173,000 $24,237,000 $0 42 Proceeds from exercise of stock options $41,360,000 $14,107,000 $12,951,000 43 Net cash used in financing activities -$129,417,000 -$135,777,000 -$44,084,000 44 Net change in cash and cash equivalents $31,482,000 $9,484,000 Effect of foreign exchange rate changes on cash and 45 cash equivalents -$921,000 $1,391,000 -$462,000 46 Cash and cash equivalents at beginning of period $235,336,000 $202,463,000 $193,441,000 47 Cash and cash equivalents at end of period $26,642,000 $235,336,000 $202,463,000 48 Cash payments during the year for: 49 Income taxes, net of refunds $77,357,000 $39,181,000 $65,683,000 50 Interest, net of capitalized interest $43,254,000 $42,405,000 $41,992,000 51 Non-cash investing and financing activities 52 Dividends declared but not paid $11,977,000 $12,185,000 $12, 112,000 Investment in property, equipment and intangibles 53 acquired in accounts payable and accrued liabilities $5,949,000 $1,099,000 $3,648,000 54 Sale of investment in unconsolidated joint venture $0 $0 $2,350,000 55 Seller-financing to purchaser $0 $2,000,000 $0 56 57 Questions: 68 1. When you examine the Statement of Cash Flows, you recognize a large investment in Business Acquisitions. What business did Choice Hotels acquire in 20187 And how much did Choice Hotels 59 60 spend? Hint: See the bottom of page 50 and top of page 51 in the 10-K report and a similar line in the 61 62 63 6:4 2. In 2018, Choice Hotels made a large repurchase of Treasury stock. Hint: Positive numbers mean cash inflows and negative numbers mean cash outflows. Does the Net cash provided by operating activities 56 67 exceed cash outflow for Purchase of Treasury stock and Dividends paid in 20187 Show the amounts