Financial Performance Comparison: Hilton International vs. Marriott

This report provides a comparative financial analysis of Hilton and Marriott International, two leading hospitality firms. It focuses on key financial ratios to assess their performance in profitability, liquidity, and solvency. The analysis includes a detailed examination of gross profit, net profit, current ratios, quick ratios, debt-equity ratios, asset turnover, and fixed asset turnover. The study uses data from 2014 and 2015 to evaluate the financial health and efficiency of both companies, highlighting areas where each excels and where improvements are needed. The report concludes by summarizing the findings and suggesting that while both companies operate with high-profit margins, Hilton shows stronger profitability and liquidity, while Marriott demonstrates greater efficiency in asset utilization. The report emphasizes the importance of financial analysis for strategic decision-making in the hospitality sector, particularly for entrepreneurs considering new ventures.

Comparison of Two Hospitality Organizations
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Table of Contents
INTRODUCTION ...............................................................................................................................3
Comparison of the financial performance of leading hospitality firms...........................................3
CONCLUSION ...................................................................................................................................4
References............................................................................................................................................6
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INTRODUCTION
In the present era, hospitality sector is growing with the very high pace. This is one of the
main aspects which attract entrepreneur to enter in hospitality industry with innovative services. For
making effectual decisions regarding such aspects the present will discuss profitability, liquidity and
solvency aspect of Hilton and Marriott. Both are the top leading hospitality firms which offer
luxurious accommodation services to the customers. In this, by making analysis of the financial
performance of both the companies entrepreneur can evaluate the growth of companies operating in
hospitality sector.
Comparison of the financial performance of leading hospitality firms
Ratio analysis of Marriott international and Hilton are enumerated below:
Ratios Formula Hilton Marriott International
2014 2015 2014 2015
Gross profit 6483 7207 1966 2123
Net profit 673 1404 753 859
Sales revenue 10502 11272 13796 14486
Profitability ratios
GP ratio GP / NS *
100
61.7% 63.9% 14.25% 14.66%
NP ratio NP / NS *
100
6.4% 12.46% 5.46% 5.93%
Liquidity ratios
Current ratio Current assets
/ current
liabilities
1.11:1 1.05 .63 .43
Quick ratio CA – (Closing
stock +
prepaid
expenses) /
CL
.74 .69 .39 .37
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Debt-equity
ratio
Debt / equity 2.43 1.72 - -
Efficiency ratios
Asset
turnover ratio
Sales / total
assets
.40 .43 2.02 2.24
Fixed asset
turnover ratio
Sales / total
fixed assets
1.16 1.24 9.19 11.64
Return on
equity
14.77% 26.15%
 Profitability ratios: The above analysis presents that gross and net profit margin of Hilton is
higher than Marriott international (MI). In the accounting year 2015, GP ratio of Hilton
increased in which it was 63.9%. In comparison to this, GP of MI was 14.66% which is
highly lower as compared to Hilton. Further, NP ratio of Hilton also inclined from 6.4% to
12.46%. However, NP margin of Hilton is lower in comparison to the gross profit generated
by it. Thus, it is highly required for the business organization to exert control over indirect
expenses (Healy and Palepu, 2012). Along with this, in the financial period 2015 NP ratio of
MI was only 5.93%. Liquidity ratios: From the above analysis it has been determined that Hilton is highly
capable in relation to meeting its financial obligations over current assets. At the end of
2015, current ratio Hilton and MI was 1.05:1 and .43:1. On the other hand, quick ratio of
Hilton was .69:1 in 2015. Whereas, MI has .37 current assets which can be easily
convertible by it for fulfilling the current obligation. However, both the companies require
exerting control on expenses which assists them in increasing the level of their current assets
(Hu and et.al., 2012). Solvency ratios: In 2015, debt-equity ratio of Hilton decreased from 2.43:1 to 1.72:1 which
is good indicator for the firm. This aspect presents that in 2015 Hilton made payment to the
debt-holders. Thus, company needs to issue 1 debt in against to 2 equity shares for
improving its solvency aspect (Nobes, 2014).
 Efficiency ratios: By making comparison of asset and fixed asset turnover ratio it has been
identified that MI has performed more effectually as compared to Hilton. In the accounting
years 2014 and 2015, MI has made optimum use of both fixed and current assets while
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performing the business activities and functions (Financial Ratio Analysis, 2016). Thus,
Hilton needs to frame competent strategic and policy framework (Brigham and Houston,
2009). This is turn helps them in encouraging the human resources to make their best efforts
while performing the business activities.
CONCLUSION
From the above report, it has been concluded that ratio analysis is the most effectual
techniques through which business performance of two companies can be analyzed. It can be
revealed from the report that profitability, liquidity and solvency position of Hilton is good in
against to MI. Thus, MI requires undertaking effectual measures which make contribution in the
attainment of organizational goals and objectives. Besides this, it can be inferred that companies
operating in hospitality sector enjoys high level of profit margin. Thus, entrepreneur will attain
success by opening hotel in UK by offering the innovative services.
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REFERENCES
Books and Journals
Brigham, E.F. and Houston, J.F., 2009. Fundamentals of Financial Management. 12th ed. Cengage
Learning.
Healy, P. and Palepu, K., 2012. Business Analysis Valuation: Using Financial Statements. Cengage
Learning.
Hu, Z. and et.al., 2012. Improved in situ Hf isotope ratio analysis of zircon using newly designed X
skimmer cone and jet sample cone in combination with the addition of nitrogen by laser
ablation multiple collector ICP-MS. Journal of Analytical Atomic Spectrometry. 27(9).
pp.1391-1399.
Nobes, C., 2014. International Classification of Financial Reporting 3e. Routledge.
Online
Financial Ratio Analysis. 2016. Online. Available through:
<http://www.myaccountingcourse.com/financial-ratios/>. [Accessed on 12th August 2016].
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