Problem 25

The Kiter Inn has several profitability ratios for 20X2-20X4 as follows:

20X2 20X3 20X4

Profit margin 12% 13% 14%

EBITDA 18% 17% 16%

Operating efficiency ratio 24% 26% 28%

Return on assets 20% 19% 18%

Return on owners' equity 40% 42% 44%

Required:

Based on the above profitability ratios, discuss:

1. Management's performance over the three-year period.
2. The profitability of the Kiter Inn from 20X2 through 20X4.