Reference no: EM132151814

Assignment -

Please check the excel worksheet and complete all three sections.

1. Follow these instructions for CHH CASH FLOW SECTION: Read the instructions page carefully, and review the three recent Choice Hotels' 10-Q reports and two recent 10-K reports found on the SEC website.

Record data from the 10-Q and 10-K reports by completing the Income Statement, Balance Sheet, and Cash Flows worksheets within the Project Excel Workbook.

Calculate the percentage change in the appropriate columns on each worksheet and highlight significant changes of 25 percent in the income statement categories of total revenues, total operating expenses, and net income in the Income Statement worksheet.

Answer the questions in the Income Statement, Balance Sheet, and Cash Flow worksheets within the Project Excel Workbook.

Questions from Choice Hotels:

1. Should the company try to reduce debt or to grow rapidly to return to a positive stock holder equity?   We are trying to reduce our debt. How would you recommend modifying the cash flow (increase or decrease) in each of the three activities: (1) operating activities, (2) investing activities, and (3) financing activities? Explain.  Remember that positive numbers mean cash is flowing in and negative numbers mean that cash is flowing out

2. We are trying to improve our operations by increasing cash flow in one of the three activities: (1) operating activities, (2) investing activities, or (3) financing activities. Which one of the three activities would you recommend, and why? 

3. Is there sufficient operating cash flow to sustain the capital expenditures and distribute dividends to shareholders?

2. FOLLOW THESE INSTRUCTIONS FOR CHH BUSINESS PERFORMANCE RATIOS SECTION: Complete the workbook with data from the 10-Q and 10-K reports and calculate the percent change in the appropriate column. You will also need to answer a few questions in the worksheet to help Choice Hotels identify areas of improvement in their operations and explore options to reduce their debt. Your ratio calculations should be completed in the Business Performance Ratios worksheet in the Project Excel Workbook.

Questions from Choice Hotels:

Note: Use the ratios in your answers, and explain what the ratios mean. Note: Shareholder equity remains negative at the end of 2017.  The deficit is decline.  The large negative equity was caused by earlier purchases of Treasury Stock.  This will make the equity multiplier, return on equity, and the debt to equity ratios meaningless.

1. To help improve our operations, comment on how we are doing with respect to asset management. Are there any areas for improvement?

2. To measure our company's solvency, which of these ratios would we use and why? For Companies with deficits in shareholder equity, many analysts look to consistent strong cash flow from operations as the best indication of solvency.

3. In an effort to help us improve our overall debt situation, we would like you to provide us with an assessment of our company's solvency and leverage.  What would be your plan to achieve positive equity?

4. Why might the ratios have increased or decreased?

3. FOLLOW THESE INSTRUCTIONS FOR CHH BALANCE SHEET RATIOS: you will use the same Project Excel Workbook as in the previous steps. Complete the workbook with data from the 10-K reports you used in Step 1 and calculate the percent change in the appropriate column. You will also need to answer a few questions in the worksheet to help Choice Hotels identify areas of improvement in asset management.

Questions from Choice Hotels:

Note: Use the ratios in your answers, and explain what the ratios mean.

1. Based on your calculations of current ratio and total-asset turnover ratio, what would you recommend we do to improve our asset management?

2. We would like to improve the use of our working capital. Based on your ratio calculations. What are your specific recommendations?  Please note that the current liability for deferred revenue consists primarily of amounts owed to customers in Loyalty programs.  This will limit what can be done to increase working capital. 

3. Based on the ratios you calculated above, would you invest in our company? Why or why not?

Attachment:- Assignment Files.rar