ACCT Question 5

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Answer the following thoroughly. No

 

Marriott International, Inc., and Wyndham Worldwide Corporation 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:

 

 

 

x

Marriott

Wyndham

x

(in millions)

(in millions)

Operating profit before other expenses and interest

$695

$718

Other income (expenses)

36

12

Interest expense

(180)

(167)

Income before income taxes

$551

$563

Income tax expense

93

184

Net income

$458

$379

 

 

 

Balance sheet information is as follows:

 

 

 

x

Marriott

Wyndham

x

(in millions)

(in millions)

Total liabilities

$7,398

$6,499

Total stockholders’ equity

1,585

2,917

Total liabilities and stockholders’ equity

$8,983

$9,416

 

 

 

The average liabilities, stockholders’ equity, and total assets were as follows:

 

 

 

x

Marriott

Wyndham

x

(in millions)

(in millions)

Average total liabilities

$7,095

$6,582

Average total stockholders’ equity

1,363

2,802

Average total assets

8,458

9,384

 

 

 

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).

 

 

 

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