Question

Review Hilton's Balance sheet and explain the financial analysis of the company. For e.g ratios, working capital, debt, etc

ASSETS	($million)	LIABILITIES AND EQUITY	($million)
Current Assets:		Current Liabilities:
Cash and cash equivalents	1,805	Accounts payable	1,460
Net receivables	1,111	Short Term Debt / Current Portion of long-term debt	41
Other Current Assets	233	Other Current Liabilities	719
Total current assets	3,149	Total current liabilities	2,220
Intangibles and Other Assets:		Long-term debt	9,455
Fixed Assets	1,126	Other liabilities	3,338
Goodwill	5,146	Deferred liability Charges	1,679
Intangible Assets	5,954	Misc. Stocks	10
Other Assets	297	Total liabilities	16,702
Deferred Asset Charges	116	Common stock	3
		Capital Surplus	(5,999)
		Retained Earnings	(4,462)
		Treasury stock	10,443
		Other equity	(899)
		Total equity (deficit)	(914)
TOTAL ASSETS	$15,788	TOTAL LIABILITIES AND EQUITY	$15,788

Answer 1

The first thing to notice in Hilton's Balance sheet is the equity deficit. It describes a situation where the company's value is exceeded by its liabilities. This may occur when a company has issued stock whose value is less than that of the company. Other situations include the issuing of bonds that have a value greater than the total value of the company. The high debt (~$9.5Billion) in Hilton's case suggests it has borrowed money to cover accumulated losses instead of issuing more shares through equity funding could cause the company's balance sheet to show negative shareholders' equity.

Working Capital Ratio = Current Assets / Current Liabilities = 3,149 / 2220 = 1.42

Generally, a working capital ratio of less than one is taken as indicative of potential future liquidity problems, while a ratio of 1.5 to two (this case of Hilton) is interpreted as indicating a company on solid financial ground in terms of liquidity

Debt = Short Term Debt / Current Portion of long-term debt + Long-term debt = 41 + 9,455 = $9,496 million

ST-Debt to Total Debt = Short Term Debt / Total Debt = 41/ 9,499 = 0.0043