Marriott International, Inc. and Hilton Hotels Corp. 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
|
Hilton
|
|
Net income
|
$596
|
$238
|
|
Interest expense
|
99
|
274
|
|
Income tax expense
|
100
|
127
|
Balance sheet information at the end of the period is as follows (in millions):
|
|
Marriott
|
Hilton
|
|
Total liabilities
|
$4,587
|
$5,674
|
|
Total stockholders' equity
|
4,081
|
2,568
|
|
Total liabilities and stockholders' equity
|
8,668
|
8,242
|
The average liabilities, stockholders' equity, and total assets for the year were as follows (in millions):
|
|
Marriott
|
Hilton
|
|
Average total liabilities
|
$4,462
|
$5,808
|
|
Average total stockholders' equity
|
3,960
|
2,404
|
|
Average total assets
|
8,422
|
8,212
|
1. Determine the following ratios for both companies. (Round to two decimal places.)
a. Rate earned on total assets
b. Rate earned on total stockholders' equity
c. Number of times interest charges earned
d. Ratio of liabilities to stockholders' equity
2. Determine the leverage formula for both companies.
3. Analyze and compare the two companies, using the information in (1) and (2).