Question
In: Finance
Based on your horizontal analysis of Choice Hotels' and Marriott International's total revenue, total expenses, and net income
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?
Solutions
Expert Solution
Source of data for the table below:
- Annual Report, Form 10 K filing for the fiscal year 2016 & 2017 for Choice Hotel
- Annual Report, Form 10 K filing for the fiscal year 2016 & 2017 for Marriott International
Please see the tables below for Horizontal analysis
In the data below, total revenues and net income are directly observation in the Income Statement. Total expenses are not directly available and the same have been back calculated as Total Revenues - Net Income
Change has been calculated as = 2017 figure / 2016 figure - 1
| Choice Hotel | |||
| Parameter | 2017 | 2016 | Change |
| Total Revenue | 1,007,356 | 924,641 | 8.95% |
| Total Expenses | 892,463 | 785,270 | 13.65% |
| Net Income | 114,893 | 139,371 | -17.56% |
| Marriott International | |||
| Parameter | 2017 | 2016 | Change |
| Total Revenue | 22,894 | 17,072 | 34.10% |
| Total Expenses | 21,522 | 16,292 | 32.10% |
| Net Income | 1,372 | 780 | 75.90% |
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?
- Marriott International is showing a healthy increase across total revenues and net income
- Choice Hotels has less than 10% growth rate in revenues while its net income has slipped
Under these situations and basis our analysis, Marriott International would be a more attractive target for an acquisition by the equity firm.
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?
Marriott International experienced a higher change.
And the highest change was seen in case of net income, It has gone up by 75.90% in one year.
jeff jeffy answered 2 years agoRelated Solutions
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