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timer Asked: Apr 19th, 2020

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accounting work, need good work done on it . must meet the deadline since the university deadline is a must

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Choice Hotels 10-K In Project 2, you will learn how to access US Securities and Exchange Commission public information about compa how to complete a horizontal analysis and to calculate and analyze ratios. Start by looking up the 10-K for Choice Hotels (CHH) for year 2019 2018 on the SEC website. Follow these steps: 1. Go to www.SEC.gov. 2. At the top on the right, click Company Filings. 3. In the fast search box, enter the Ticker Symbol for Choice Hotels, CHH. 4. Click Search 5. EDGAR search results will appear. Notice the name and address for Choice Hotels. Also notice Results: Filing Type. Enter "10-K" and click Search. 6. You should see a 10-K with a filing date of 2020-03-02. 2019-02-26. This is the latest available at the time th 7. There are two available formats of this 10-K data, and we will use the Documents to answer th data provided in the worksheets to complete the Ratio Analysis and to answer related questions. 8. Complete the horizontal analysis of financial statements by filling in each grey box. 9. Answer all questions on each tab in this workbook. 10. Explain the significance of your ratio calculations. Note: Quarterly Financial Statements are not audited. Only annual financial statements are audited by a public ac c information about companies. You will also learn Follow these steps: Choice Hotels. Also notice the box that reads Filter est available at the time this project was developed. Documents to answer the questions. You will use the each grey box. are audited by a public accounting firm. Read pages 4 and 5 in the 10-K. This is the overview of the business. Answer the following questions: 1. Discuss Choice Hotels’ business model. Answer: 2. On page 5, there is a sentence that reads in part, "Historically, we have returned value to our shareholders in two primary ways:" What are the two ways? Answer: 3. Choice Hotels is a company that has grown to over $1 billion in assets in 2018. So $100 million is a big number for Choice. How much did Choice Hotels pay as a Special Dividend in 2012? Answer: Note: The Business section continues to page 23, where the Risk section begins. A consultant would be well advised to read all of both sections. The items in 10-K Risk section are designed to give full disclosure. Of more interest is a section starting on page 37: Of more interest is a section starting on page 37: Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (MD&A) This is where management tells shareholders what happened and why. The following questions apply to the MD&A. 4. What happened on February 1, 2018? Hint: You may find it useful to read Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Answer: 5. Which 3 of the risks in Item 1A are the most significant? Explain your reasons for selecting them. Answer: Horizontal Analysis Consolidated Statements of Income - USD ($) REVENUES: Royalty fees Initial franchise and relicensing fees Procurement services Marketing and reservation system Owned Hotels Other Total revenues OPERATING EXPENSES: Selling, general and administrative Depreciation and amortization Marketing and reservation system Owned Hotels Total operating expenses Impairment of goodwill Gain on sale of assets, net Operating income OTHER INCOME AND EXPENSES, NET: Interest expense Interest income Loss on extinguishment of debt Other (gain) loss Equity in net (income) loss of affiliates Total other income and expenses, net Income before income taxes Income taxes Net income Basic earnings per share: Dec. 31, 2019 Dec. 31, 2018 $388,151 $27,489 $61,429 $577,426 $20,282 $40,043 $1,114,820 $376,676 $26,072 $52,088 $543,677 $0 $42,791 $1,041,304 $168,833 $18,828 $579,139 $14,448 $781,248 -$3,097 $100 $318,642 $170,027 $14,330 $534,266 $0 $718,623 -$4,289 $82 $318,474 $46,807 -$9,996 $7,188 -$4,862 $9,576 $48,713 $269,929 $47,051 $222,878 $45,908 -$7,452 $0 $1,437 $5,323 $45,216 $273,258 $56,903 $216,355 Basic earnings per share (in dollars per share) $4.00 $3.83 Diluted earnings per share (in dollars per share) $3.98 $3.80 Questions: 1. Many of Choice Hotels Income Statement accounts have remained consistent for the past 3 years. However, the 2. In comparing year-over-year expenses, there is a significant change in Depreciation and Amortization expense. W 3. The largest item in revenue and in expense is Marketing and reservation system. What are these two items and 4. What is the most significant trend based on your horizontal analysis over this three-year period? Why? (New-Old)/Old 12 Months Ended Dec. 31, 2017 $ Change 2018 to 2019 % Change 2018 to 2019 $ Change 2017 to 2018 $341,745 $23,038 $40,451 $499,625 $0 $36,438 $941,297 $165,821 $6,680 $479,400 $0 $651,901 $0 $257 $289,653 $45,039 -$5,920 $0 -$3,229 $4,546 $40,436 $249,217 $126,890 $122,327 $2.16 $2.15 for the past 3 years. However, there is a new line item called "Owned Hotels." What is this? iation and Amortization expense. What caused this change? (New-Old)/Old % Change 2017 to 2018 12 Months Horizontal Analysis Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 31, 2019 Current assets Cash and cash equivalents Receivables (net of allowance for doubtful accounts of $18,482 and $15,905, respectively) Income taxes receivable Notes receivable, net of allowances Other current assets Total current assets Property and equipment, at cost, net Operating lease right-of-use assets Goodwill Intangible assets, net Notes receivable, net of allowances Investments, employee benefit plans, at fair value Investments in unconsolidated entities Deferred income taxes Other assets Total assets Current liabilities Accounts payable Accrued expenses and other current liabilities Current portion Liability for guest loyalty program Current portion of long-term debt Total current liabilities Long-term debt Long-term portion Deferred compensation and retirement plan obligations Income taxes payable Operating lease liabilities Liability for guest loyalty program Other liabilities Total liabilities Commitments and Contingencies Common stock, $0.01 par value; 160,000,000 shares authorized; 95,065,638 shares issued at December 31, 2019 and December 31, 2018; 55,702,628 and 55,679,207 shares outstanding at December 31, 2019 and December 31, 2018, respectively Additional paid-in-capital Accumulated other comprehensive loss Treasury stock, at cost; 39,363,010 and 39,386,431 shares at December 31, 2019 and December 31, 2018, respectively $33,766 $141,566 $11,126 $25,404 $24,727 $236,589 $127,535 $24,088 $159,196 $290,421 $103,054 $24,978 $78,655 $20,747 $97,442 $1,386,672 $73,449 $90,364 $71,594 $82,970 $7,511 $325,888 $844,102 $112,662 $29,949 $26,147 $21,270 $46,698 $3,467 $1,410,183 $951 $231,160 -$4,550 -$1,219,905 Retained earnings Total shareholders’ deficit Total liabilities and shareholders’ deficit $968,833 -$23,511 $1,386,672 Questions: 1. Choice Hotels works with franchisees who operate hotels under one of the Choice Hotels' brands such as Camb What is Property and equipment, at cost, net and why was there a significant difference from 2018 to 2019? 2. What does the “Accrued expenses and other current liabilities” item represent? 3. Treasury Stock is a negative account that is almost as large as the Total Assets. a) What does the "Treasury Sto c) What would have been the Total Shareholders' Equity if there had been no purchases of Treasury Stock? Hint: T 4. What does the “Long-term debt” item represent? 5. What is the most significant trend based on your horizontal analysis over this two-year period? Why? (New-Old)/Old 12 Months Ended Dec. 31, 2018 $26,642 $138,018 $10,122 $36,759 $32,243 $243,784 $127,535 $0 $168,996 $271,188 $83,440 $19,398 $109,016 $30,613 $84,400 $1,138,370 $73,511 $92,651 $67,614 $83,566 $1,097 $318,439 $753,514 $110,278 $24,212 $26,276 $0 $52,327 $37,096 $1,322,142 $951 $213,170 -$5,446 -$1,187,625 $ Change 2018 to % 2019 Change 2018 to 2019 $795,178 -$183,772 $1,138,370 Choice Hotels' brands such as Cambria Hotels, Sleep Inn, and Econo Lodge. The Balance Sheet lists an account called Property and equipm difference from 2018 to 2019? ets. a) What does the "Treasury Stock" item represent? b) Why would a company want to acquire Treasury Stock? purchases of Treasury Stock? Hint: This is a calculation. this two-year period? Why? unt called Property and equipment, at cost, net. Consolidated Statements of Cash Flows - USD ($) $ in Thousands CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Depreciation and amortization - marketing and reservation system Franchise agreement acquisition cost amortization Impairment of goodwill Impairment of long-lived assets Loss on sale of business Loss on debt extinguishment Gain on disposal of assets, net Provision for bad debts, net Non-cash stock compensation and other charges Non-cash interest and other investment (income) loss Deferred income taxes Equity in net losses from unconsolidated joint ventures, less distributions received Franchise agreement acquisition cost, net of reimbursements Change in working capital and other, net of acquisition Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Investment in property and equipment Investment in intangible assets Proceeds from sales of assets Asset acquisition, net of cash acquired Proceeds from sale of unconsolidated joint venture Business acquisition, net of cash acquired Payment on business disposition, net Contributions to equity method investments Distributions from equity method investments Purchases of investments, employee benefit plans Proceeds from sales of investments, employee benefit plans Issuance of notes receivable Collections of notes receivable Other items, net Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long term debt Net (repayments) borrowings pursuant to revolving credit facilities 12 Months Ended Dec. 31, 2019 $ 222,878 $ $ 18,828 17,294 $ $ $ $ $ $ $ $ $ $ $ 7,992 3,097 7,259 4,674 7,188 (2,103) 8,240 17,615 (4,010) 9,810 12,562 $ (38,944) $ $ (21,824) 270,556 $ $ $ $ $ $ $ $ $ $ $ (57,342) (6,699) 10,585 (168,954) 8,937 (10,783) (27,828) 10,241 (3,175) 2,217 $ $ $ $ (20,722) 14,231 (1,875) (251,167) $ $ 422,376 (72,400) Principal payments on long-term debt, including premium on extinguishment Debt issuance costs Purchases of treasury stock Dividends paid (Payments on) proceeds from transfer of interest in notes receivable Proceeds from exercise of stock options Net cash used in financing activities Net change in cash and cash equivalents Effect of foreign exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Cash payments during the year for: Income taxes, net of refunds Interest, net of capitalized interest Non-cash investing and financing activities: Dividends declared but not paid Investment in property, equipment and intangibles acquired in accounts payable and accrued liabilities Seller-financing to purchaser $ (256,809) $ $ $ $ (3,936) (50,638) (48,089) (24,409) $ $ $ $ 21,410 (12,495) 6,894 230 $ $ 26,642 33,766 $ $ 41,859 48,179 $ $ 12,535 959 $ - Questions: 1. When you examine the Statement of Cash Flows, you recognize an Asset Acquisition. What were the acquisition 2. What does the “Investment in intangible assets” item represent? 3. What does the “Principal payments on long-term debt” item represent? 12 Months Ended Dec. 31, 2018 Dec. 31, 2017 $ 216,355 $ 122,327 $ $ 14,330 19,597 $ $ 6,680 20,609 $ $ $ $ $ $ $ $ $ $ $ 9,239 4,289 (56) 10,542 15,986 3,695 (3,510) 7,389 $ $ $ $ $ $ $ $ $ $ $ 7,191 (237) 5,514 22,857 (772) 57,106 6,579 $ (52,929) $ (30,638) $ $ (2,031) $ 242,896 $ 40,158 257,374 $ $ $ $ $ $ $ $ $ $ $ (47,673) (1,803) 3,053 (3,179) (231,317) (9,604) 1,429 (2,895) 2,825 $ $ $ $ $ $ $ $ $ $ $ (23,437) (2,517) 1,000 (50,554) 4,569 (2,447) 2,245 $ $ $ $ (36,045) 4,997 (1,040) (321,252) $ $ $ $ (19,738) 655 109 (90,115) 9,037 $ 20,600 $ (115,003) $ $ $ (603) $ (660) $ $ $ $ (2,590) (148,679) (48,715) 173 $ $ $ $ (9,807) (48,651) 24,237 $ $ $ $ 41,360 (129,417) (207,773) (921) $ $ $ $ 14,107 (135,777) 31,482 1,391 $ $ 235,336 26,642 $ $ 202,463 235,336 $ $ 77,357 43,254 $ $ 39,181 42,405 $ $ 11,977 5,949 $ $ 12,185 1,099 $ - $ 2,000 set Acquisition. What were the acquisitions? And how much did Choice Hotels spend? Instructions 1. Please enter the data from the previous tabs by clicking on the cell and typing = and then clicking on the desire For example to enter Net Income for 2018 type = and go to the income statement tab and click on cell I27. 2. Complete the calculations. 3. Explain the significance of your ratio calculations. Be careful, only Balance sheet numbers are in thousands. Income Statement and Cash Flow Statement numbe Brigham, E; Ehrhardt, M. (2017). Chapter 3. Financial Management, Theory and Practice. Boston, MA: Cengage Le Solvency Ratios 1 Ability to Current Liabilities: Current Ratio a. Calculate Current Ratio 2019 Current Assets Current Liabilities b. Calculate Current Ratio Leverage Ratios 2 Debt Ratio Total Debt Total Assets 2019 c. Calculate Debt Ratio Profitability Ratios 3 Net Profit Margin Net Income Total Revenues 2019 Calculate Net Profit Margin 4 Basic Earning Power (BEP) EBIT Total Assets, Multiply by 1,000 to compare 2019 Calculate BEP Asset Management Ratios 5 Evaluating Receivables: Days Sales Outstanding a. Calculate Average Daily Sales 2019 Receivables (net ……) Multiply by 1,000 to compare Total Revenues 365 days Average Sales per day b. Calculate Days Sales Outstanding 6 Explain the significance of your ratio calculations. Answer: nd then clicking on the desired cell. ab and click on cell I27. Cash Flow Statement numbers are as presented. . Boston, MA: Cengage Learning Suggested level for a good result 2018 Above 0.42 Around .09 2018 Above 8% 2018 Above 12% 2018 50 days or less ...
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