Liquidity

• Current Ratio: decreased from 1.11 to 1.05 from 2013 to 2015
• Quick Ratio: similarly decreased from .86, to .81.
• Though liquidity has decreased, a current ratio greater than one indicates that Hilton is able to pay current liabilities.
• A quick ratio which is less than one is concerning because inventory and prepaids will likely not convert to cash efficiently.
• Working capital has decreased from $241 million to $181 million, which is concerning.

Solvency & Financial Leverage

• Debt to total assets: decreased from .84 in 2013, to .82 in 2014, and finally to .77 in 2015.
• Debt to equity: also decreased from 5.21 in 2013, to 4.54 in 2014, and to 3.32 in 2015
• Times interest earned: increased from 1.78 in 2013, to 2.71 in 2014, to 3.60 in 2015.
• These ratios show a move towards equity financing as opposed to debt financing.

• Because Hilton owns so many hotels and properties, asset utilization is relatively low.
• Fixed asset turnover increased from .403 in 2013 to .487 by 2015.
• Total asset turnover also improved from .37 to .44 from 2013 to 2015.
• Inventory turnover was 26.65 in 2015, but this figure is unimportant because inventory is not a significant factor in the hospitality industry.

Profitability

• Because of the nature of the industry, the income statement shows no cost of goods sold.
• Operating profit margin increased significantly from 11.32% in 2013, to 15.93% in 2014, and finally to 18.37% in 2015.
• Net profit margin increased dramatically, from 4.26% in 2013 to 12.46% by 2015.
• Return on total assets and return on equity also increased over the three years examined, showing growing profitability for Hilton.

• 3:1 stock split.
• Earnings per share: $.45 for 2013, $.68 for 2014, and $1.42 for 2015.
• Stock price closed at $57.35 as of February 1, which is a PE of 37.69.