Marriott-MSK
Marriott-MSK
Marriott-MSK
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SPENCER MAHAGAN<br />
ACG2021 ()
Executive Summary<br />
After completing this project and reading about<br />
the <strong>Marriott</strong>, and their independent audit report<br />
my conclusions are as follows, in the last two<br />
years the Marriot Hotels have experienced a<br />
decrease in revenue, stock, and assets. This<br />
has resulted in many budget cuts, and<br />
downsizing. Right now would probably not be a<br />
great time to invest in Marriot because it is going<br />
through many changes, and its long term future<br />
is unknown.<br />
• http://www.asiaing.com/marriott-internationalinc.-2007-annual-report.html
Introduction<br />
• Chief Executive Officer: Bill <strong>Marriott</strong><br />
• Home Office: Washington<br />
• <strong>Marriott</strong> Hotels is a chain of hotels<br />
dedicated to the highest quality rooms,<br />
and service in the hotel industry.<br />
• Ending Date of Fiscal Year: 12/31<br />
• <strong>Marriott</strong> Hotels main geographic area of<br />
operations is the United States, but there<br />
are over 3,000 hotels worldwide
Audit Report<br />
• Companies Independent Auditor:<br />
Ernst & Young LLP<br />
• The Audit Report expressed concern with<br />
the continual drop in the stock price, and<br />
the decrease in the companies return on<br />
assets. The report states that there will be<br />
some financial troubles in the near future.<br />
Although some of the <strong>Marriott</strong>’s<br />
investments hopefully should start to turn<br />
more of a profit in the next year, it is not<br />
sure how much.
Stock Market Information<br />
• Stock Price: $23.15<br />
• 12 Month trading range: $22.12-$44.94<br />
• Dividend per share: 0.325<br />
• October, 2, 2008<br />
• My opinion about the <strong>Marriott</strong> hotels stock,<br />
for right now is to SELL. The main reason<br />
is because as of right now the stock is<br />
very close to the low end of the trading<br />
range. The stock price has been<br />
continuously falling, and many cuts are in<br />
the future.
Industry Situation and Company<br />
Plans<br />
• <strong>Marriott</strong>’s outlook for the next year is not<br />
very good. <strong>Marriott</strong> has experienced<br />
almost a 28% decrease in their profits for<br />
the third quarter of 2008.<br />
• This heeds warning for 2009, because<br />
many budget cuts are planned.<br />
• Major changes are needed to increase<br />
profit and the continually falling stock<br />
price.
• http://www.latimes.com/business/la-fimarriott3-2008oct03,0,7210106.story<br />
• http://www.dividend.com/blog/?p=1945<br />
• http://www.marriott.com/news/detail.mi?m<br />
arrArticle=357879<br />
• http://www.hoovers.com/marriott/--<br />
ID__56078,ticker__MAR--/free-co-finfactsheet.xhtml
Income Statement<br />
• Single Step (2007) (2006)<br />
• Gross Profit: 1,956 1,688<br />
• Operating Income: 1,188 1,011<br />
• Net Income: 696 608<br />
• Net income has increased<br />
• In millions
Balance Sheet<br />
• ASSETS (2007) (2006)<br />
• Cash 332 193<br />
• Net Receivables 1,333 1,317<br />
• Inventories 1,680 1,619<br />
• Other Current Assets 227 185<br />
• Net Fixed Assets 1,329 1,238<br />
• Total Assets 8,942 8,588<br />
• In millions
In millions<br />
• Liabilities (2007) (2006)<br />
• Accounts Payable 2,166 1,843<br />
• Short-Term Debt 175 15<br />
• Other Current Liabilities 535 664<br />
• Long-Term Debt 2,790 1,818<br />
• Long Term Liabilities 1,847 1,630<br />
• Total Liabilities 7,513 5,970
• SHE (2007) (2006)<br />
• Common Stock Equity 1,429 2,618<br />
• Total Equity 1,429 2,618<br />
In millions<br />
• ASSETS(8,942)=SHE(1,429)+ LIABILATIES(7,513)
Statement of Cash Flows<br />
• Net Operating Cash Flow 778 970<br />
• Net Investing Cash Flow 125 119<br />
• Net Financing Cash Flow (762) (1,099)<br />
• Net Change in Cash 141 10<br />
• Depreciation & Amortization 197 188<br />
• Capital Expenditures (671) (529)<br />
• Cash Dividends Paid (105) (93)<br />
• In millions
• Cash flow has overall decreased from<br />
2006 to 2007<br />
• The company is technically growing, by<br />
investments, and new hotel ventures, but<br />
they are not seeing returns on these yet.<br />
• The Companies major source of income is<br />
from its hotel revenue.<br />
• Overall cash has decreased.
Accounting Policies<br />
• There were no special accounting policies<br />
that I found dealing with revenue<br />
recognition, cash, investments or<br />
equipment.
Financial Analysis<br />
Liquidity Ratios<br />
• Working Capital (2007): 696 Million<br />
• Working Capital (2006): 792 Million<br />
• Current Ratio (2007): 1.242<br />
• Current Ratio (2006): 1.325<br />
• Average Inventory on Hand: 4.6 Million<br />
• Inventory Turnover: 2,398 Million<br />
• Average Day Sales Uncollected: 0.15
Financial Analysis<br />
Profitability Ratios<br />
• Profit Margin (2007): 5.4%<br />
• Profit Margin (2006): 5.0%<br />
• Return On Assets (2007): 7.9%<br />
• Return On Assets (2006): 8.2%<br />
• Return On Equity (2007): 34%<br />
• Return On Equity (2006): 36%
Financial Analysis<br />
Solvency Ratio<br />
• Debt To Equity (2006): 2.28<br />
• Debt To Equity (2007): 5.25<br />
In millions<br />
• Has greatly increased from 2006 to 2007<br />
which is not a good thing.
Financial Analysis<br />
Market Strength Ratios<br />
• Dividend Yield (2006): 1.03%<br />
• Dividend Yield (2007): 1.25%<br />
• Price (2006): $34.65<br />
• Price (2007): $ 25.98<br />
• In millions
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