Starwood Hotels & Resorts Worldwide Inc

Financial Analysis of

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Prepared by:[pic 4]

EXECUTIVE SUMMARY

Starwood Hotels & Resorts Worldwide Inc. is one of the leading hotel and leisure companies in the world, owning, operating and franchising numerous hotels, resorts and residences under its ten world renowned brands.  In this report we will review some of Starwood’s Accounting Policies, analyze its reported financial statements for the last five years, and conduct ratio analysis in order to provide insight to the company’s financial standing.  This will provide valuable information to various parties such as shareholders, potential investors, lenders, creditors, etc.

The results of our analysis suggest that Starwood’s profits are down to the past five years and liquidity is decreasing meaning it earns less than the industry for each dollar of investment. Findings suggest that the company doesn’t manage its sales, expenses and assets as efficiently as it could, leading to lower financial performance compared to the industry. Its fixed asset effectiveness is acceptable but decreasing, and its credit granting and cash collection efficiency is also declining, leading to an increasingly higher amount of accounts receivable.    Both Return on Assets and Return on Equity are well below the industry averages.

The Cash Coverage ratio has declined during the last years due to depreciation, amortization, dividends paid and other accounts payable which may indicates a difficult situation for the company. Earnings per Share have steadily increased, however, through the last five years and at the same time Starwood appears to rely more and more on funds provided by creditors, which is not ideal and can lead to a financial trouble.  While Starwood stands as one of the leaders in the Hotel & Leisure industry, its financial standing, does not show sufficient signs of growth or improvement to make it a good investment for possible new investors.  This could very well be the reason it was recently acquired by Marriott International.

TABLE OF CONTENTS

EXECUTIVE SUMMARY        1

TABLE OF CONTENTS        2

TABLE OF FIGURES        4

INTRODUCTION        5

Hotel Business Operation        6

ACCOUNTING POLICIES        6

Revenue Recognition        7

Accounting Policy Type        7

Inventories        8

Plant, Property and Equipment        8

Goodwill and Intangible Assets        9

FINANCIAL STATEMENT ANALYSIS        9

BALANCE SHEET        9

Assets        9

Liabilities        11

Stockholders’ Equity        11

INCOME STATEMENT        12

Revenues        13

CASH FLOW STATEMENT        14