Financial Analysis

Financial Analysis

Intercontinental Hotels

InterContinental Hotels Group is a holding company. Co. owns a portfolio of established and diverse hotel brands, including InterContinental Hotels & Resorts, Crown Plaza Hotels & Resorts, Holiday Inn Hotels & Resorts (including Holiday Inn Club Vacations) ("Holiday Inn"), Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo with 4,438 franchised, managed, owned and leased hotels and 646,679 guest rooms in over 100 countries and territories around the world. Co. also manages the hotel loyalty program, Priority Club Rewards.

Ratios

Profitability Ratios

12/31/2010

12/31/2009

ROA % (Net)

9.86

7.09

ROE % (Net)

133.33

297.9

ROI % (Operating)

37.41

(0.76)

EBITDA Margin %

33.6

6.63

Calculated Tax Rate %

25.87

EBT<0

Liquidity Ratios

12/31/2010

12/31/2009

Quick Ratio

0.42

0.32

Current Ratio

0.49

0.4

Net Current Assets % TA

(17.13)

(21.91)

Debt Management

12/31/2010

12/31/2009

LT Debt to Equity

2.86

6.82

Total Debt to Equity

2.93

7.53

Interest Coverage

7.05

-

Asset Management

12/31/2010

12/31/2009

Total Asset Turnover

0.57

0.51

Receivables Turnover

5.26

4.65

Inventory Turnover

188.25

215

Accounts Payable Turnover

15.36

14.65

Accrued Expenses Turnover

4.83

5.18

Property Plant & Equip Turnover

0.92

0.87

Cash & Equivalents Turnover

27.59

25.21

Per Share

12/31/2010

12/31/2009

Cash Flow per Share

1.6

1.52

Book Value per Share

0.94

0.52

Ratio Analysis

Profitability Ratios

The profitability of InterContinental Hotels Group is satisfactory as the trends of the company from 2009 to 2010 shows that the company has been gaining profits. This statement can be endorsed by the evaluation of the profitability ratios. The return on assets of InterContinental Hotels Group from 2009 to 2010 is reflecting that profitability structure of the company is raised from 7.09 to 9.86. In addition to this, return on equity shows decline over the 2 years. As the return on equity was 297.9 in 2009 and 133.33 is in 2010.

In addition to this, return on investment and operating profit margin is also showing the increase in the profitability structure of InterContinental Hotels Group. Furthermore, the operating profit margin shows an increase over the years. The operating profit marginwas 6.63 in 2009, whereas it increases in 2010 to 33.6. This could be as a result of increase in the gross profit margin.. Besides it, the tax rate is reached to 25.87 from 0 which seem to be a positive sign for the InterContinental Hotels Group, and the over all performance of the company is satisfactory.

Liquidity Ratios

The liquidity ratios that include current ratio, quick ratio and net current assets as a percentage of total assets are increased from 2009 to 2010. This shows that the liquidity position of the InterContinental Hotels Group is satisfactory. The current ratio increased from 0.4 to 0.49 from 2009 to 2010 respectively and the quick ratio increased from 0.32 to 0.42 from 2009 to 2010; this shows that the goods sold are partially financed by suppliers (creditors). In addition to this, the net current assets as a percentage of total assets increased from (21.91) in 2009 to (17.13) in 2010. This is mainly because there is little asset compared to liabilities of the firm. Inventory and receivable days are also very short, and extra cash is quickly re-invested in acquiring stock or carrying out expansion plans. Sales are mainly on a cash and carry basis.

Assets Management Ratios

The assets management ratios that are the efficiency ratios of InterContinental Hotels Group are very much supportive. The reason of this statement is that the turnover of the company is in favour of InterContinental Hotels ...