Reference no: EM132170340

Instructions

Read and follow these instructions to complete the workbook.

1. To complete the Income Statement worksheet, Balance Sheet worksheet, and Cash Flow worksheet:
a. Use the data you already collected in Project 2 to fill in the Choice Hotels table.
b. Collect Marriott International's 10-K data from the Securities Exchange Commission website.
c. Complete the percent change table on the right side of the workbook. (In the Balance sheet workbook, provide data only for the requested totals.)
d. Answer the questions in the space given.
2. Given the supplied data in the Cost and Investing worksheet, answer the questions in the space provided.
3. To complete the Budgeting worksheet and Profitability worksheet:
a. Solve the ratios provided.
b. Answer the questions in the space given.

Income Statement

Questions:

1. Based on your horizontal analysis of Choice Hotels' and Marriott International's total revenue, total expenses, and net income, which company would be a more attractive target for an acquisition by the equity firm and why?

2. Given the changes in total revenue, operating income, and net income from 2016 to 2017, did Choice Hotels or Marriott International experience more change? Which area (total revenue, operating income, or net income) changed most?

Balance Sheet

Questions:

1. Based on your horizontal analysis of Choice Hotels' and Marriott International's total assets, total liabilities, and total equity, which company is most attractive for an acquisition by the equity firm and why?

2. What advice would you give to the client, Choice Hotels, to reduce its total liabilities?

Cash Flow

Questions:

1. Based on your horizontal analysis of Choice Hotels' and Marriott International's operating, investing, and financing activities, which company is most attractive for an acquisition by the equity firm and why?

2. What advice would you give to the client, Choice Hotels, to improve their investing and financing activities?

Cost and Investing

Questions:
1. The cost-allocation system Choice Hotels has been using allocates over 90 percent of overhead costs to the Standard Guest Room and the Junior Suite, because over 90 percent of the models produced were one of these two models. How much overhead was allocated to each of the three models last year? Discuss why this might not be an accurate way to assign overhead costs to products.

2. Choice Hotels' production manager proposes allocating overhead by direct labor hours instead, since the different models require different amounts of labor. How much overhead would be allocated to each guest room (per unit and in total) using this method? Show all supporting calculations.

Budgeting

Questions:

1. Quick ratios between 0.5 and 1 are considered satisfactory, as long as the collection of receivables is not expected to slow. Does the client, Choice Hotels, have enough current assets to meet the payment schedule of current liabilities with a margin of safety?

2. Which of the above ratios would you use to determine which company, Choice Hotels or Marriott International, is more attractive for an acquisition by the equity firm and why?

Profitability

Questions:

1. The return on assets ratio tells us the profit generated by each dollar in assets. You will want to compare this ratio to Choice Hotels' historical performance and to Marriott International to understand if it is an acceptable ratio. Is the return on assets ratio acceptable? Why or why not?

2. Which of the above ratios would you use to determine which company, Choice Hotels or Marriott International, is more attractive for an acquisition? Why?

3. Based on the financial statement analysis, earnings per share analysis, budgeting ratios, and the above profitability ratios, which company would you invest in and why?

Attachment:- Workbook.rar