Starwood Hotels & Resorts Worldwide provides lodging services around the world. The company is separated into two major divisions.

• Hotel Ownership: Hotels owned and operated by Starwood.

• Vacation Ownership: Resort properties developed, owned, and operated for timeshare vacation owners.

Financial information for each division, from a recent annual report, is as follows (in millions):

a. Use the DuPont formula to determine the return on investment for each of the Star-wood business divisions. Round whole percents to one decimal place and investment turnover to two decimal places.
b. Determine the residual income for each division, assuming a minimum acceptable income of 5% of total assets. Round minimal acceptable return to the nearest million dollars.
c. Interpret yourresults.

Transcribed Image Text:

Hotel Ownership $4,383 Vacation Ownership 688 Revenues Income from operations Total assets 571 105 6440 2,139