INTRODUCTION TO BUSINESS: CHAPTER 17 COMPARING INDUSTRY RATIOS (BASIC) HOMEWORK

Question

INTRODUCTION TO BUSINESS: CHAPTER 17 COMPARING INDUSTRY RATIOS (BASIC) HOMEWORK ASSIGNMENT You are interested in investing in a regional hotel company and have investigated the financial seaton the page potential investments. Use the information in the table below to answer the questions at the bottom of the page. Hotel N HOTELN HOTEL JHOTELC N I HOTEL J | HOTEL C 1 HOTEL w INFORMATION FROM THE INCOME STATEMENT Total revenue Total expenses INFORMATION FROM THE BALANCE SHEET Current assets Total assets Current liabilities Total liabilities Total number of common $428,806| $1,277,5501-57e. $10,099,000 $3,816,000 9,503,000 3,618,000 354,461 1,822,748 1,020,000 8,183,000 895,000 4,587,0005,944,000 389,000 68,629 262,388 101,091 456,441 32,312 526,549 3,783,127 693,809 3,089,318 168,238 1,946,000 8,668,000 2,356,000 225,800 stock outstanding Using the data above, complete the following chart. You must show the formula for each calculation for at least one hotel HOTEL N HOTELJ HOTEL C HOTEL W E1. Net income or loss 59 505193 Return on sales -42. 3. Current ratio | TA-ZI4. Stockholders' equity 15, Return on equity upr4ml 2-t-o-e- leem / | DE16. Debt-to-equity ratio 51235 2.3 uS 7. Earnings per share 2 0.5/ Final Analysis: Which company would you rather invest in? Why? In Boad prof near to

Explanation / Answer

Note: There are more than 4 parts of this question. So as per rule I am answering first 4 parts of this question.

1. Net income or loss;

Formula is as follow;

(Total revenue – Total expenses)

For Hotel N:

$10099000 - $9503000 = $596000

For Hotel J:

$3816000 - $3618000 = $198000

For Hotel C:

$428806 - $354461 = $74345

For Hotel W:

$1277550 - $1822748 = ($545198) Loss

2. Return on sale:

Formula is as follow;

Net income * 100 / Sales

For Hotel N:

$596000 * 100 / $10099000 = 5.90%

For Hotel J:

$198000 * 100 / $3816000 = 5.19%

For Hotel C:

$74345 * 100 / $428806 = 17.34%

For Hotel W:

($545198) * 100 / $1277550 = - 42.67%

3. Current ratio:

Formula is as follow;

Current assets / Current liabilities

For Hotel N:

1946000 / 2356000 = 0.83

For Hotel J:

1020000 / 895000 = 1.14

For Hotel C:

68629 / 101091 = 0.68

For Hotel W:

526549 / 693809 = 0.76

4. Stockholders’ equity:

Formula is as follow;

Total assets – Total liabilities

For Hotel N:

8668000 – 4587000 = $4081000

For Hotel J:

8183000 – 5944000 = $2239000

For Hotel C:

262388 – 456441 = $194053

For Hotel W:

3783127 – 3089318 = $693809

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