Ratio Analysis

1. What is a hotel’s operating cash flow to current liabilities, if the property recorded in 2006 an operating cash flow of $9,418,717? The property’s total liabilities in 2006 were $9,450,000 of which 38.6% were current. In 2005, the hotel’s total liabilities were $8,900,000 of which 34.2% were current.

2. What is the average collection period for a hotel that generated total revenue of $22,950,781 with accounts receivable representing 9.6% of revenue in 2008? In 2007 the hotel achieved total revenue of $24,098,320 with accounts receivable comprising 10.2% of revenue.

3. Compute the debt-equity ratio for a hotel over a three-year period, and indicate whether the ratio is improving or declining in terms of the owners’ ability to meet long-term obligations. The owners’ equity was $517,300 in 2006, $455,000 in 2005 and $450,000 in 2004. Total liabilities for the same period were $659,000, $610,000, and $600,000 respectively.

4. What is the quick ratio for a 161-room hotel that had total current assets of $304,817, current liabilities of $407,418, and the following current asset composition: cash $218,409, accounts receivable $18,922, inventory $6,661, and prepaid expenses and other $60,825?

5. What is the net return on assets for a hotel that generated total revenue of $4,076,000 in 2006 based on total assets of $7,694,748? The property’s net income was $298,300 with a GOP of $1,892,900. In 2005, the hotel achieved total revenue of $3,864,000, and net income was $309,120 with a GOP of $1,159,200 based on total assets of $6,925,273.

6. What is the solvency ratio for a hotel that had current assets of $207,000, current liabilities of $185,000, total assets of $1,050,000, owners’ equity of $400,000, and total liabilities and owners’ equity of $1,050,000?