Discussion Board Rubric Proficient Novice Introduction and quality of discussion’s Argument 1 point It is consistent with application in research related to its context. Clarity of ideas. 0.50 point The topic has a partially weak association to clarity of ideas and related topic. Objectivity of Tone, overall quality & Review of Literature in APA 6th format within past 7 years 1 point Tone is consistent, addressed professionally and objectively. Evidence in literature supports arguments. 0.50 point The tone is not consistently objective. Partially poor evidence in review of literature. Quality of Reply posts 0.5 point Consistent clarity and supported by research evidence. 0.25 point Partially lack of clarity or lack of support with research evidence. Balance Sheet RatioChoice HotelsRatiosSeptember 30, 2018 9 Month EndDec. 31, 2017Formulas* Prof feedback: Working Capital is wrong for both years and Total Asset Turnover are all wrong. Since you did not show your work, I can't determine what is wrong.Current ratio0.941.41current ratio = current assets / current liabilitiesConsolidated Balance Sheets - USD ($ in Thousands)Sep. 30, 2018Dec. 31, 2017Working capital$ (663,823.00)$ (641,918.00)working capital = current assets – current liabilities$ in ThousandsTotal Asset Turnover ratio0.250.27total asset turnover ratio = net sales / total assetsNote: Net sales can be described as operating income from the income statement.Current assetsCash and cash equivalents$ 30,916$ 235,336Receivables (net of allowance for doubtful accounts of $15,509 and $12,221, respectively)$ 185,586$ 125,870Income taxes receivable$ 308$ - 0Notes receivable, net of allowance$ 32,642$ 13,256Other current assets$ 31,163$ 25,967Total current assets$ 280,615$ 400,429Property and equipment, at cost, net$ 117,610$ 83,374Goodwill$ 173,641$ 80,757Intangible assets, net$ 263,923$ 100,492Notes receivable, net of allowances$ 83,034$ 80,136Investments, employee benefit plans, at fair value$ 21,542$ 20,838Investments in unconsolidated entities$ 107,905$ 134,226Deferred income taxes$ 32,730$ 27,224Other assets$ 80,037$ 67,715Total assets$ 1,161,037$ 995,191Current liabilitiesDeferred RevenueAccounts payable$ 71,684$ 67,839Deferred revenue consists of the following:Accrued expenses and other current liabilities$ 78,591$ 84,315December 31,Deferred revenue$ 65,810$ 52,14220172016Current portion of long-term debt$ 1,099$ 1,232(in thousands)Liability for guest loyalty program$ 82,346$ 79,123Loyalty programs$127,921$115,851Total current liabilities$ 299,530$ 284,651Long-term debt$ 781,433$ 725,292Initial, relicensing and franchise fees8,9059,352Long-term deferred revenue$ 107,370$ 98,459Deferred compensation and retirement plan obligations$ 26,137$ 25,566Procurement services fees3,9397,668Income taxes payable$ 26,276$ 29,041Deferred income taxes$ - 0$ 39Other346347Liability for guest lo.

1. Discussion Board Rubric
Proficient
Novice
Introduction and quality of discussion’s Argument
1 point
It is consistent with application in research related to its
context. Clarity of ideas.
0.50 point
The topic has a partially weak association to clarity of ideas and
related topic.
Objectivity of Tone, overall quality & Review of Literature in
APA 6th format within past 7 years
1 point
Tone is consistent, addressed professionally and objectively.
Evidence in literature supports arguments.
0.50 point
The tone is not consistently objective. Partially poor evidence
in review of literature.
Quality of Reply posts
0.5 point
Consistent clarity and supported by research evidence.
0.25 point
Partially lack of clarity or lack of support with research
evidence.
Balance Sheet RatioChoice HotelsRatiosSeptember 30, 2018 9
Month EndDec. 31, 2017Formulas* Prof feedback: Working
Capital is wrong for both years and Total Asset Turnover are all
wrong. Since you did not show your work, I can't determine
what is wrong.Current ratio0.941.41current ratio = current
assets / current liabilitiesConsolidated Balance Sheets - USD ($

2. in Thousands)Sep. 30, 2018Dec. 31, 2017Working capital$
(663,823.00)$ (641,918.00)working capital = current assets –
current liabilities$ in ThousandsTotal Asset Turnover
ratio0.250.27total asset turnover ratio = net sales / total
assetsNote: Net sales can be described as operating income from
the income statement.Current assetsCash and cash equivalents$
30,916$ 235,336Receivables (net of allowance for doubtful
accounts of $15,509 and $12,221, respectively)$ 185,586$
125,870Income taxes receivable$ 308$ - 0Notes receivable,
net of allowance$ 32,642$ 13,256Other current assets$
31,163$ 25,967Total current assets$ 280,615$
400,429Property and equipment, at cost, net$ 117,610$
83,374Goodwill$ 173,641$ 80,757Intangible assets, net$
263,923$ 100,492Notes receivable, net of allowances$
83,034$ 80,136Investments, employee benefit plans, at fair
value$ 21,542$ 20,838Investments in unconsolidated
entities$ 107,905$ 134,226Deferred income taxes$ 32,730$
27,224Other assets$ 80,037$ 67,715Total assets$
1,161,037$ 995,191Current liabilitiesDeferred
RevenueAccounts payable$ 71,684$ 67,839Deferred revenue
consists of the following:Accrued expenses and other current
liabilities$ 78,591$ 84,315December 31,Deferred revenue$
65,810$ 52,14220172016Current portion of long-term debt$
1,099$ 1,232(in thousands)Liability for guest loyalty
program$ 82,346$ 79,123Loyalty
programs$127,921$115,851Total current liabilities$ 299,530$
284,651Long-term debt$ 781,433$ 725,292Initial, relicensing
and franchise fees8,9059,352Long-term deferred revenue$
107,370$ 98,459Deferred compensation and retirement plan
obligations$ 26,137$ 25,566Procurement services
fees3,9397,668Income taxes payable$ 26,276$
29,041Deferred income taxes$ - 0$ 39Other346347Liability
for guest loyalty program$ 50,085$ 48,701Other liabilities$
38,285$ 42,043Total$141,111$133,218Total liabilities$
1,329,116$ 1,253,792Commitments and
ContingenciesSHAREHOLDERS' DEFICITCommon stock,

3. $0.01 par value; 160,000,000 shares authorized; 95,065,638
shares issued at September 30, 2018 and December 31, 2017;
56,223,839 and 56,679,968 shares outstanding at September 30,
2018 and December 31, 2017, respectively$ 951$
951Additional paid-in-capital$ 209,053$
182,448Accumulated other comprehensive loss$ (5,317)$
(4,699)Treasury stock, at cost; 38,841,799 and 38,385,670
shares at September 30, 2018 and December 31, 2017,
respectively$ (1,148,441)$ (1,064,573)Retained earnings$
775,675$ 627,272Total shareholders’ deficit$ (168,079)$
(258,601)
Questions from Choice Hotels:
Note: Use the ratios in your answers, and explain what the
ratios mean.
1. Based on your calculations of current ratio and total-asset
turnover ratio, what would you recommend we do to improve
our asset management? Comparing current ratios of both year
2018 and 2017 : [280,615/299,530 =0.9368 and
400,429/284,651 =1.4067] respectively. It says that 2018 was
better than 2017. The company has been paying down its debts.
With regard to total asset turnover ratio: 291,490/1,161,037
=0.25106 The current assets reduced in 2018 as indicated by
reduction of the current ratio from 1.41 to 0.94 while the
working capital has also reduced from 2017. The assets were
turned 0.27 times in 2017 before declining to 0.25 times in
2018. overall, the assets management has worsened . The
company recorded lower revenues in 2018 than in 2017 while
the assets of the business increased making the turnover to the
lower.
2. We would like to improve the use of our working capital.
Based on your ratio calculations. What are your specific
recommendations? Please note that the current liability for
deferred revenue consists primarily of amounts owed to
customers in loyalty programs. This will limit what can be done

4. to increase working capital. See the table below.
Improve on the collection of the receivables, which reduces the
allowance doubtful debts. The business should reduce the use
of current debt and consider using long term debts. The
business can also consider selling the long term assets for cash,
which boosts the working capital.
Sheet2
Sheet3
Income StatementConsolidated Statements of Income - USD ($
in Thousands)3 Months Ended9 Months EndedSep. 30, 2018Sep.
30, 2017Sep. 30, 2018Sep. 30, 2017REVENUESRoyalty fees$
111,009$ 103,322$ 290,926$ 263,215Initial franchise and
relicensing fees$ 6,262$ 5,729$ 18,957$
17,263Procurement services$ 11,620$ 8,810$ 39,391$
30,545Marketing and reservation system$ 152,367$ 142,915$
416,715$ 382,245Other$ 10,232$ 9,154$ 30,336$
26,546Total revenues$ 291,490$ 269,930$ 796,325$
719,814OPERATING EXPENSESSelling, general and
administrative$ 38,191$ 46,573$ 125,325$
124,356Answer:$ 76,51110.63%Depreciation and
amortization$ 3,815$ 1,601$ 10,537$ 4,986Marketing and
reservation system$ 138,316$ 128,661$ 394,112$
365,435Total operating expenses$ 180,322$ 176,835$
529,974$ 494,777Gain (loss) on sale of land and building, net$
- 0$ (32)$ 82$ (32)Operating income$ 111,168$ 93,063$
266,433$ 225,005Answer:$ 416,715$ 394,112OTHER
INCOME AND EXPENSES, NET$ 41,428Interest expense$
11,706$ 11,399$ 34,720$ 33,884$ 836Interest income$
(1,966)$ (1,575)$ (5,218)$ (4,277)Other gains$ (972)$
(778)$ (1,355)$ (2,251)Equity in net (income) loss of
affiliates$ (43)$ 274$ 5,358$ 3,213Total other income and
expenses, net$ 8,725$ 9,320$ 33,505$ 30,569Income
before income taxes$ 102,443$ 83,743$ 232,928$
194,436Income tax expense$ 22,484$ 26,554$ 48,044$
62,293Net income$ 79,959$ 57,189$ 184,884$

5. 132,143Basic earnings per share (in dollars per share)$ 1.42$
1.01$ 3.27$ 2.34Diluted earnings per share (in dollars per
share)$ 1.41$ 1.01$ 3.24$ 2.33Cash dividends declared per
share (in dollars per share)$ 0.215$ 0.215$ 0.645$
0.645Answer:$ 35,1976.64%#3) * Prof feedback: The percents
change are incorrect. The formula should be: (newest year -
oldest year)/oldest yearAnswer:$ 41,42815.55%Answer:$
38,49216.53%Answer:$ (14,249)-29.66%Answer:$
52,74128.53%#7) * Prof feedback: The percents change are
incorrect. The formula should be: (newest year - oldest
year)/oldest
yearAnswer:2018201723.22%18.36%Answer:2018201745.97%3
7.29%#10) * Prof feedback: It is incorrect. Divide Net Income
by Total Revenue - Revenue from the Marketing and reservation
system.
Use the data provided to the right to answer the following
questions. We will use only the nine-month ended data. Some
questions will require you to use the 10-Q document. Note that
all dollar amounts are in thousands of dollars, so a net income
of $79,959 really means $79,959,000. We don't need the last
three zeros.
1. In US dollars ($), how much did total revenue increase from
the nine months ended September 30, 2017 to the nine months
ended September 30, 2018? We will use only the nine-month
figures. What is the percent change? You can copy and paste
numbers or click on the cell and type the equal sign (=), then
click on the number you need.
2a. In the revenues for 2018, what is the amount for marketing
and reservation system? In operating expense, what is the
amount for marketing and reservation system?
2b. In past years, the revenue from marketing and reservation
system was equal to the marketing and reservation operating
expense. Now open the Documents 10-Q data. There is a
heading title "Recently Adopted Accounting Standards” on page
7. On page 8 there is a paragraph that starts, “Topic 606 also

6. impacted the Company’s accounting for surpluses and deficits
generated from marketing and reservation system activities.”
Has the company earned a profit in the past from a marketing
and reservation system? Does it intend to do so in the future?
Note: This is how financial analysts use SEC documents. They
look at numbers and look for an explanation in the words. There
is more explanation on page 11 in the footnote that begins
“Marketing and reservation system expenses are those expenses
incurred to facilitate the delivery of marketing and reservation
system service.”
4. Going back to your Excel file income statement, what is the
dollar increase in operating income? What is the percent
increase?
5. Going back to your Excel file income statement, what is the
dollar increase in income before income tax? What is the
percent increase?
6. Going back to your Excel file income statement, what is the
increase or decrease in dollars and percent for income tax?
7. What is the increase in dollars and percent for net income?
8. Looking at your work above, what contributed to the increase
in net income?
9. Calculate profit margin in percent for both years. Profit
margin is defined as net income / total revenues. The typical
company has a profit margin near 10 percent.
10. Management accounting uses data differently from GAAP
accounting and this can be included in the 10-Q or 10-K.
Management would like to know the profit margin in percent if
we exclude the revenue for marketing and reservation system.
Please calculate these numbers for September 30, 2018 and
2017.
11. Based on your experience as a financial analyst, why is net
income up?

7. Consolidated Statements of Income - USD ($) in thousands
3. Going back to your Excel file income statement, what is the
dollar increase in total operating expenses? What is the percent
increase?
Answer: Because of a decrease in tax payable and also that
acquisition beefed up revenue.
Answer: In the past the company never earnded a profit from
the marekting and reservation systesm . The company
anticipates a net ioncoem or loss arising reported in eahc
quarterarising from fluctuations in each quarter
Answer: The reduction in tax expense asnd the increase in
operating income
Balance SheetConsolidated Balance Sheets - USD ($ in
Thousands)Sep. 30, 2018Dec. 31, 2017$ in ThousandsCurrent
assetsCash and cash equivalents$ 30,916$
235,336Receivables (net of allowance for doubtful accounts of
$15,509 and $12,221, respectively)$ 185,586$
125,870Income taxes receivable$ 308$ - 0Notes receivable,
net of allowance$ 32,642$ 13,256Other current assets$
31,163$ 25,967Answer:Yes, it does equal based upon the
calculation. Total assets1,161,037Total current assets$
280,615$ 400,429liabilities 1,329,116Property and equipment,
at cost, net$ 117,610$ 83,374shareholder deficit-
168,079Goodwill$ 173,641$ 80,757Total liabilities and
shareholders' deficit1,161,037Intangible assets, net$ 263,923$
100,492Notes receivable, net of allowances$ 83,034$
80,136Investments, employee benefit plans, at fair value$
21,542$ 20,838Investments in unconsolidated entities$
107,905$ 134,226Answer:-5317-1148441Deferred income
taxes$ 32,730$ 27,224Other assets$ 80,037$ 67,715Total
assets$ 1,161,037$ 995,191Current liabilitiesAccounts
payable$ 71,684$ 67,839Accrued expenses and other current
liabilities$ 78,591$ 84,315Deferred revenue$ 65,810$
52,142Current portion of long-term debt$ 1,099$
1,232Liability for guest loyalty program$ 82,346$

8. 79,123Total current liabilities$ 299,530$ 284,651Long-term
debt$ 781,433$ 725,292Long-term deferred revenue$
107,370$ 98,459Deferred compensation and retirement plan
obligations$ 26,137$ 25,566Income taxes payable$ 26,276$
29,041Deferred income taxes$ - 0$ 39Liability for guest
loyalty program$ 50,085$ 48,701Other liabilities$ 38,285$
42,043Total liabilities$ 1,329,116$ 1,253,792Commitments
and ContingenciesSHAREHOLDERS' DEFICITCommon stock,
$0.01 par value; 160,000,000 shares authorized; 95,065,638
shares issued at September 30, 2018 and December 31, 2017;
56,223,839 and 56,679,968 shares outstanding at September 30,
2018 and December 31, 2017, respectively$ 951$
951Additional paid-in-capital$ 209,053$
182,448Accumulated other comprehensive loss$ (5,317)$
(4,699)Treasury stock, at cost; 38,841,799 and 38,385,670
shares at September 30, 2018 and December 31, 2017,
respectively$ (1,148,441)$ (1,064,573)Retained earnings$
775,675$ 627,272Total shareholders’ deficit$ (168,079)$
(258,601)#7) * Prof feedback: It is partially correct. The hotels
& rooms under domestic francise are incorrectAnswer:$
00.16649617782,5324,700,000.00Answer:20182017$
(18,915)$ 115,778#10) * Prof feedback: It is incorrect. The
numerator should be Total Liabilities and the denominator
should be 4,700,000,000 (not 4,700,000)
Use the data to the right to answer the following questions. We
will use only the nine-month ended data.
Some questions will require you to use the 10-Q Document. You
should see that the balance sheets are only for September 30,
not June 30.
1. Does total assets equal total liabilities and shareholders'
deficit? What are the amounts of each in 2018?
2. Look at the line items in shareholders' deficit. Which items
are negative? How much is ”accumulated other comprehensive
loss”? How much is the negative amount in treasury stock?

9. 3. Now look at the words in the document section. Footnote 7
on page 12 explains the two items in “Accumulated Other
Comprehensive Loss.” What are they?
4. On Page 15, how much money did the company spend on
buying stock for the treasury stock purchase program in the first
9 months of 2018? On Page 37 and 38 management explains
why they buy stock for treasury stock. Why do they do it?
5. Can you find any record of any inventory? If not, why not?
6. What is “Notes Receivables, net of allowances”? There are
notes receivable in current assets and notes receivable in long-
term assets. How much were they it in September 2018?
answer: Notess recevables net of allowances are the loans
advacecd to the hotel owners less the allowancews for bads
debts. The current receivables net of allowance were $32,642
ad the long term were 83,034
7. On Page 25, how many hotels and hotel rooms were under
domestic franchise at the end of September 30, 2018? Also on
page 25, how many hotels and rooms were under construction as
of September 30, 2018?
8. Before companies bought large amounts of their own stock
for treasury stock, financial analysts would calculate the debt to
equity ratio. Since the balance sheet of Choice Hotels shows
negative equity, this ratio makes no sense. In recent years,
analysts have looked at the total stock market value of the
company. As of September 28, 2018 according to Yahoo
Finance, Choice Hotels has a total stock value called market cap
(capitalization) of $4.7 billion. The total equity on the financial
statements as of June 30, 2018 was a negative $204 million.
Calculate the debt to equity ratio using $4.7 billion for equity.
9. Another calculation that is important for manufacturing

10. companies is working capital. Of course, Choice Hotels
manufactures nothing. But this will be good to know. Working
capital is current assets minus current liabilities. Calculate
working capital for Choice for September 30, 2018 and
December 31, 2017.
10. Choice has unusual liabilities. One is the liability for the
guest loyalty program. What is that liability for?
Consolidated Balance Sheets - USD ($) in thousands
Answer: Loss on Cash Flow Hedge & Foreign Currency
Answer: The company spent 101.9 million to purchase treasury
stock. Treasury stock is common and preferred shares of an
entity that were issued but repurchased by the entity, and are
held in its treasury as a risks management and mitigation
measure of the business
Answer: No, because the business is a service business that
does not have sales' inventory.
Answer: 6,800 hotels and 550,000 rooms under domestic
francise. 968 hotels and 77,709 rooms.
Answer: It is for rewards program that Choice gives out to its
clients. It is a liability until it is redeemed.
Cash Flow StatementConsolidated Statements of Cash Flows -
USD ($)9 Months Ended$ in ThousandsSep. 30, 2018Sep. 30,
2017CASH FLOWS FROM OPERATING ACTIVITIES:Net
income$ 184,884.00$ 132,143.00Adjustments to reconcile net
income to net cash provided by operating
activities:Depreciation and amortization$ 10,537.00$
4,986.00Depreciation and amortization – marketing and
reservation system$ 14,687.00$ 15,454.00Franchise
agreement acquisition cost amortization$ 6,662.00$
5,190.00Answer:$ 184,884.00(Gain) loss on disposal of
assets$ (58.00)$ 32.00Provision for bad debts, net$
6,279.00$ 3,694.00Non-cash stock compensation and other

11. charges$ 11,455.00$ 20,215.00Non-cash interest and other
(income) loss$ 492.00$ (451.00)Deferred income taxes$
(5,610.00)$ 51,126.00Equity in net losses from unconsolidated
joint ventures, less distributions received$ 7,122.00$
4,278.00Answer:$ 146,837.00Franchise agreement acquisition
cost, net of reimbursements$ (40,554.00)$
(21,443.00)Change in working capital and other, net of
acquisition$ (49,059.00)$ (50,205.00)Net cash provided by
operating activities$ 146,837.00$ 165,019.00CASH FLOWS
FROM INVESTING ACTIVITIES:Investment in property and
equipment$ (34,129.00)$ (17,514.00)Investment in intangible
assets$ (1,665.00)$ (2,376.00)Proceeds from sales of assets$
3,053.00$ - 0Business acquisition, net of cash acquired$
(231,317.00)$ - 0Asset acquisition, net of cash acquired$
(3,179.00)$ - 0Contributions to equity method investments$
(9,050.00)$ (44,876.00)Distributions from equity method
investments$ 1,429.00$ 4,307.00Purchases of investments,
employee benefit plans$ (2,441.00)$ (2,140.00)Answer:$
(299,847.00)Hotel Name: WoodSpring HotelsProceeds from
sales of investments, employee benefit plans$ 2,646.00$
2,150.00Issuance of notes receivable$ (28,876.00)$
(18,565.00)Collections of notes receivable$ 4,747.00$
630.00Other items, net$ (1,065.00)$ 109.00Net cash used in
investing activities$ (299,847.00)$ (78,275.00)Answer:$
(34,129.00)CASH FLOWS FROM FINANCING
ACTIVITIES:Net borrowings (repayments) pursuant to
revolving credit facilities$ 56,400.00$ (39,974.00)Principal
payments on long-term debt$ (477.00)$ (484.00)Purchase of
treasury stock$ (109,266.00)$ (8,887.00)Dividends paid$
(36,628.00)$ (36,483.00)Answer:$ (28,876.00)Debt issuance
costs$ (2,590.00)$ - 0Proceeds from issuance of long term
debt$ 528.00$ - 0Proceeds from transfer of interest in notes
receivable$ 173.00$ 24,237.00Proceeds from exercise of
stock options$ 41,155.00$ 9,799.00Net cash used in
financing activities$ (50,705.00)$ (51,792.00)Net change in
cash and cash equivalents$ (203,715.00)$ 34,952.00Answer:$

12. 56,400.00Effect of foreign exchange rate changes on cash and
cash equivalents$ (705.00)$ 1,433.00Cash and cash
equivalents at beginning of period$ 235,336.00$
202,463.00Cash and cash equivalents at end of period$
30,916.00$ 238,848.00Cash payments during the period
for:Income taxes, net of refunds$ 50,806.00$
31,254.00Answer:$ (109,266.00)Interest, net of capitalized
interest$ 41,746.00$ 41,119.00Non-cash investing and
financing activities:Dividends declared but not paid$
12,087.00$ 12,167.00Answer:$ (36,628.00)#1) * Prof
feedback: It is incorrect. Cash from Net Income equals Net
Income + all Depreciations + Amortizations, which are No-Cash
Expenses".Answer:$ 41,155.00Answer:$ 30,916.00#11) *
Prof feedback: Answer incorrect. Look for "Cash and Cash
Equivalants at end of period".Answer:$ 235,336.00#12) * Prof
feedback: Answer incorrect. Look for "Cash and Cash
Equivalants at end of period".
Consolidated Statements of Cash Flows - USD ($) in Thousands
Cash flow numbers that are positive mean that cash flowed into
the company. Negative numbers means that cash flowed out.
Please use the statement to the right to answer the questions
below.
1. How much cash flowed in as a result of net income in the
first nine months of 2018?
2. In cash from operating activities, what was the total cash
from operating activities for the same period?
3. Which two operating activities had significant cash outflow
in 2018 and how much were they?
4. In cash flows from investing activities, how much cash was
spent (net) on the business acquisition? Do you recall what
business was acquired?
5. How much did the company spend on its own property and

13. equipment?
6. How much did Choice loan to hotel owners (issuance of
mezzanine and other notes receivable)?
7. In cash flows from financing activities, how much did the
company borrow?
8. How much did the company spend for purchases of treasury
stock? In the next project we will look at the stock price over
time.
9. How much did the company spend on dividend payments?
10. How much cash did the company receive get from
employees exercising stock options?
11. How much cash did the company have as of September 30,
2017?
12. How much cash did the company have as of September 30,
2018?
Answer: Change in working capital and other, net of
acquisition: $(49,059.00) & Franchise agreement acquisition
cost, net of reimbursements : $(40,554.00)