Hotel Finance and Revenue

Yi Qiu

Abstract


Hilton Hotel is a global brand of five-star hotels. Since 1919, it has expanded to more than 85 countries with more than 570 hotels and resorts. The report tends to analyze the financial prospects of Hilton Hotel, mainly focusing on its analysis methods and investment methods. This paper mainly studies the financial data in recent three years: current ratio, quick ratio, turnover rate of accounts receivable, debt equity, interest repayment rate, net profit rate, return on assets, return on equity, financial risk and so on. The analysis results are compared with those of previous years. The analysis results show that according to Hilton’s current ratio analysis, the current ratio in 2015 was 76%, which means that the company does not have enough ability to repay its short-term debt. In 2016, the proportion rose to 95%, indicating that Hilton Group has better solvency. According to the quick ratio analysis, Hilton hotel does not have enough current assets to fulfill its short-term obligations. This will lead to the risk of debt repayment in the short term, as the company may not be able to arrange sudden cash flow in an emergency. The low ratio also indicates that the company may rely heavily on inventory or other assets to repay its short-term debt, which increases the company’s possible concern about bankruptcy. According to the analysis of accounts receivable turnover rate, the company’s accounts receivable recovery in 2017 is not as good as in the past. The decline in the debt to equity ratio shows potential changes in the company’s financial position. The higher the ROA ratio, the more effective the assets the company uses. The return on equity has improved over the past three years, and the current return on shareholders’ investment in Hilton Group is higher. Based on the overall analysis of Hilton Group, management needs to focus on their assets and equity to generate more revenue and control expenditure. As high debt has been used to finance assets and business operations, there is a potential risk of bankruptcy.

Keywords


Financial prospects; Analysis method; Investment method

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