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Hilton Worldwide is one of the leading players in the hospitality and leisure industry. In order to analyze Hilton Worldwides performance within the industry, it is important to compare financial ratios against the companys past performance for the year of 2012, competitors performance, and the industrys averages.
Trend Analysis
The trend analysis allows comparing the firms performance over a certain period of time, while focusing on present and past liquidity, profitability, and efficiency ratios. Liquidity ratios, including current, quick, and cash ratios, are important to examine Hilton Worldwides capacity to pay debts. Hilton Worldwides current, quick, and cash ratios for 2014 can be discussed as decreased in comparison with the data for 2012. This fact points at the companys failures to improve the liquidity as the ability to address financial obligations (Table 1).
Table 1. Liquidity Ratios.
Referring to profitability ratios, it is possible to state that the situation for 2014 was positively changed in comparison with the data for 2012. Hilton Worldwide slightly improved its profitability after two fiscal years in terms of providing more services and generating more profits, as it is seen with references to increased Gross Margin and Operating Margin (Table 2). Thus, Hilton Worldwide became more profitable and efficient.
Table 2. Profitability Ratios.
Much attention should be paid to Total Assets Turnover as the efficiency ratio to measure the firms abilities to convert available assets to generate cash assets. Referring to the data for 2014, it is possible to state that Hilton Worldwides income significantly increased in 2014 in comparison with 2012, as it is observed with references to the Total Assets Turnover rates (Table 3).
Table 3. Efficiency Ratios.
Interfirm Comparison
To analyze Hilton Worldwides position within the industry, it is necessary to compare the ratios with the ratios typical for such two key competitors as Marriott International and Starwood. In relation to liquidity ratios, Hilton Worldwide is a leader in the industry, having the highest ability to repay short-term debts. However, the profitability ratios are lower than the ratios of Starwood. Efficiency ratios can be discussed as median (Table 4).
Table 4. Interfirm Comparison.
Comparison with Industry Standards
Depending on the data for 2014, it is possible to state that Hilton Worldwides ratios are higher than those ones typical for the industry. Furthermore, the firms liquidity capacity is inclined to increase (Table 5).
Table 5. Comparison with Industry Standards.
Comparison with standards or industry averages allows understanding the trends regarding the companys performance. Hilton Worldwide demonstrates improvements regarding the liquidity capacity, but the profitability ratios are lower than those characteristic for competitors.
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