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):

 

Â
Â	  Marriott Hilton Net  income $596 $238 Interest  expense 99 274 Income  tax  expense 100 127   Â

 

 

 

 

 

Balance sheet information at the end of the period is as follows (in millions):

 

Â	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):

 

Â	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).