Business Memo

Introduction
Over the last three years, Hilton Worldwide
has seen an increase in shareholders equation. It is calculated by subtracting
equity. As Hilton has successfully made a inventory from current assets, and then
comeback after the United States financial dividing that number by current liabilities.
crisis in 2008, with each year, the company This way, inventory is not included in the
continues to grow. With the end of the 2015 decimal ratio.
Fiscal Year comes financial analysis and
goals for the upcoming year.
Quick Ratio
The following ratios are tools which gauge
the financial health of the organization in Decimal Ratio
order to show the financial trends over the 0.95
last three years. 0.9
0.85
Current Ratio 0.8
FY 2015 FY 2014 FY 2013
This ratio measures Hiltons ability to meet
any short term financial obligations which
will be coming up for the company in the Debt to Net Worth Ratio
next year. It is calculated by dividing
Hiltons current assets by the current The debt to net worth ratio shows how
liabilities. In other words, it describes much debt Hilton has in comparison to its
whether or not Hilton would be able to overall worth. This is calculated by dividing
make all payments if they were to become the companys total liability by
due at any period of time. shareholders equity. This number shows
Hilton and its shareholders for every dollar
Current Ratio the company has, its counterpart in debt
that the company owes. Over the last three
years, this number has been greatly
Decimal Ratio
1.15
decreasing, as Hilton works to lessen its
overall debt.
1.1
1.05 FY 15 FY 14 FY 13
1 $ Amount
3.30 4.51 5.11
FY 2015 FY 2014 FY 2013 of Debt

Quick Ratio Debt Ratio

The quick ratio shows a similar
Debt ratio analysis tells Hilton and its
measurement to that of the current ratio,
shareholders the portion of assets that are
however it takes into account the inventory
being financed by the shareholders or
that the company currently has. As
lenders. The lower the percentage, the
inventory is often seen as the least liquid
better for the company, as it means the less
asset, in this ratio it is subtracted from the
Hilton relies on others to finance the
company. In other words, it shows the
amount of leverage the company is using to
finance itself.
FY 15 FY 14
Debt
(Leverage) 0.769 0.82
Amount
Return on Assets Ratio
This ratio shows how well Hilton is
converting its assets into income. For every
dollar of assets, this ratio shows how much
of each dollar will be converted into income.
This is another way to show the correlation
between how much leverage or debt is
being taken from each dollar that Hilton
makes.
Return on Assets Ratio
FY 2013 FY 2014 FY 2015
0.02
$ Dollar of Asset to Income 0.03
0.55
0 0.5
This chart shows that in 2013, of each
dollar, 0.02 cents was converted into
income. 2014 was not too much greater at
0.03 cents, however, in the last year, this
number has increased to 0.05 cents per
every dollar. This goes to show that Hiltons
profitability is slowly increasing, and is
looking to become even greater over the
next several years if this upward trend
continues.
Return on Net Worth Ratio
This ratio shows how much of Hiltons profit
is due to shareholders equity. This can be
used to compare Hiltons profitability to that
of their competitors. This percentage has
been increasing over the last couple of
years.
FY 15 FY 14 FY 13
% 23.66 14.35 10.54
FY 13
This is an increasing profit for Hiltons
0.839 shareholders which we are hoping to
continually increase over the next several
years.
Average Collection Period Ratio
This ratio lets Hilton know how long the
turn-around takes to turn any credited
account into sales or cash. This lets
managers know the time it will take, for
example, accounts payable or accounts
paid for by credit cards, to turn around into
cash or asset for Hilton.
FY 15 FY 14 FY 13
Days for
turn- 28.37 29.33 27.40
around
As Hilton accounts on a month basis, this
means that Hiltons turn-around time is less
than a month.
1 Summary
Preliminarily, it appears as though Hilton
may not be in the best place financially.
However, Hilton is one of the worlds
leading markets in the hospitality and hotel
industry. With such a wide berth of
locations and sublets of extended stay,
business, and leisure hotels, Hilton has
established not only a solid income within
the hotel industry, but have created a
secure financial background in order to
borrow a great deal and use its
shareholders investments to pursue growth
and expansion across the globe. This being
taken into account, Hilton is doing well for
itself financially, and with the trends seen
over the last three years, will continue to
grow and thrive in the future.
One Year Action Plan
Over the next year, Hilton plans to continue
to grow and to increase Return on Assets
as well as Return on Net Worth to give back
to its investors. Following the United States
financial deterioration in 2008 (the
companys founding state being Texas), the
company suffered a great loss, as the
hospitality industry greatly suffered. In the
last three years, Hilton has seen a great
increase in total assets and net worth, as
the debt ratio has continually decreased.
What does the next year hold for Hilton?
While Hilton cannot predict what the next
year brings in terms of the stock market, in
reference to trends seen over the last three
years, Hiltons finances seem to be on the
climb. This in turn means higher returns for
investors, and a higher net worth for the
company. This can be seen in a variety of
trends, including:
4 continued
the debt will be merged into growth,
as many of the other financial ratios
show growth in the company overall.
By increasing marketing and investors over
the next year, and aiming to reduce the
debt ratio by expanding less and paying off
current debts, Hilton will not only continue
to improve return on assets and net worth,
but decrease debt and debt to net worth
ratios, overall increasing the value and
worth of Hilton. This will increase investors
and raise the price of stock, assuming that
no major issues arise in the hospitality
industry in the next year.
Best,
Hilton International

1 The return on assets is steadily

growing. This is a sign that over the
next couple of years, the return on
assets will continue to grow, and the
amount of return that is turned to
income will continue to grow. The
increase from 0.03 to 0.055 cents
return is actually an 83.33% increase
in one year.

2 The return on net worth has also

continued to grow over the last three
years. This shows that the overall
worth of Hilton is slowly increasing to
stable levels that were seen prior to
2008. This is a 64.88% increase in
one year alone.

3 Despite the debt to net worth

increasing over the last three years,
this can mean that Hiltons finances
have improved enough, that such a
large and generally successful staple
of the hospitality industry can use
debt to increase its overall wellbeing
in the next couple of years. Perhaps