Task: COMPARING INDUSTRY RATIOS (BASIC)
You are interested in investing in a regional hotel company and have investigated the financial statements of four potential investments. Use the information in the table below to answer the questions at the bottom of the page.
Hotel N Hotel J Hotel C Hotel W
Information from the income statement
Total revenue 10,099,000 3,816,000 428,806 1,277,550
Total expenses 9,503,000 3,618,000 354,461 1,822,748
Information from the balance sheet
Current assets 1,946,000 1,020,000 68,629 526,549
Total assets 8,668,000 8,183,000 262,388 3,783,127
Current liabilities 2,356,000 895,000 101,091 693,809
Total liabilities 4,587,000 5,944,000 456,441 3,089,318
Total number of 225,800 389,000 32,312 168,238
common stock outstanding
(Use the table for your answers.)
1. What is the net profit (or net loss) for each company?
2. Calculate the return on sales for each company.
3. Calculate the total stockholders' equity for each company.
4. What is the current ratio for each company?
5. Calculate the return on equity ratio for each company.
6. What is the debt to equity ratio for each company?
7. Calculate the basic earnings per share for each company.
Hotel N Hotel J Hotel C Hotel W
1. Net income (net profit or net loss)
2. Return on sales
3. Current ratio
4. Stockholders' equity
5. Return on equity
6. Debt-to-equity ratio
7. Earnings per share (basic)
8. Which company would you rather invest in? Why?