HYATT HOTELS CORPORATION

Hyatt Hotels Corporation

Executive Summary

Financial analysis may also refer to accounting analysis. It is undertaken to assess the reliability, stability, and profitability of the company or a project. It also assists top management in making significant business related decisions such as continuing or discontinuing a segment of business, making additional purchases or cutting down additional costs (Kieso, Weygandt & Warfield, 2007, p. 1320). The report is divided into three main segments, which are significance of financial data, background information of aforementioned corporation and comparison of financial data such as return on assets, return on equity, asset turnover, profit margin, debt to equity, and current ratio for the year 2012 to that of market data.

Hyatt Hotels Corporation

Introduction

The primary aim of this report is to analyse the financial health of Hyatt Hotels Corporation for the year 2012 and 2011. The main purpose of this paper is to evaluate and compare the financial and accounting results of the aforementioned company to that of market data. It assists in comprehending the financial status and strengths or weaknesses of the company from investor, lender, debtor, and other significant shareholders' perspectives.

Importance of financial data

Financial ratio analysis is a significant tool that aims at helping rigorous business minded professionals to evaluate the financial health and performance of the business. These ratios are means of providing critical and useful information if calculated accurately and on timely basis. It facilitates financial professionals in making better decisions (Alvarado, 2011, p. 1-7).

Liquidity ratios help in measuring the capability of a company to pay off its debt in short run. Current and Quick ratios are mostly used as to measure the liquidity of company's liquidity. The creditors, suppliers and bankers are usually more interested in evaluating the company's capability to meet its obligations by conducting a detailed liquidity analysis (Cheong, n.d., p. 1-3).

The solvency ratios assess the company's ability to sustain and perform its primary operations over a long period of time. The most common ratio that measures the solvency or indicates the debt structure of the company is debt to equity ratio. The creditors that have lent their money to the company for long term are most interested in tracking these ratios. Similarly, stakeholders are also interested in assessing the company's ability to pay interest over debt as it reaches to maturity.

Profitability ratios indicate the company's capability to make profit from its operations overall. This particular ratio analysis is of great significance to investors, because investors invest in a company in order to yield certain return in form of dividends. The increasing profitability level of a company may lead to increasing share prices and capital gains. The ratios like return on assets, return on equity and profit margin helps in measuring the profit of a company. The company earning profit or making loss affects the company's capability to to obtain sources of finance such as debt or equity. In addition, it has a significant influence on company's liquidity level. That is why creditors and investors both are very ...