Comparing Starwood Hotels & Resorts and Hilton Hotels
The following current items, listed in alphabetical order, are taken from the consolidated balance
sheets of Starwood Hotels & Resorts and Hilton Hotels as of December 31, 2006. (All amounts
are in millions of dollars.) Any assets or liabilities with which you may not be familiar are noted
1. Compute working capital and the current ratio for both companies.
2. On the basis of your answers to (1), which company appears to be more liquid?
3. As you know, other factors affect a company’s liquidity in addition to its working capital and
current ratio. Comment on the composition of each company’s current assets and ways this
composition affects the company’s liquidity.