Question - Marriott International, Inc., and Hilton Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information from the two companies is as follows for a recent year:
Marriott Hilton (in millions) (in millions)
Operating profit before other expenses and interest $1,011 $1,274
Other income (expenses) 7 62
Interest expense (124) (498)
Income before income taxes 894 838
Income tax expense 286 266
Net income $608 $572
Balance sheet information is as follows:
Marriott Hilton
(in millions) (in millions)
Total liabilities $5,970 $12,754
Total stockholders' equity 2,618 3,727
Total liabilities and stockholders' equity $8,588 $16,481
The average liabilities, stockholders' equity, and total assets were as follows:
Marriott Hilton
Average total liabilities $7,250 $9.343
Average total stockholders' equity 2,935 3,269
Average total assets 6,933 12,612
1. Determine the following ratios for both companies (round to one decimal place after the whole percent):
a. Rate earned on total assets
b. Rate earned on total stockholders' equity
c. Number of times interest charges are earned
d. Ratio of liabilities to stockholders' equity
2. Analyze and compare the two companies, using the information in (1). Be sure to use at least 1 outside reference to support your analysis.