c
  



Debt Ratio 27.30% 20.83% 23.71% 27.11% 29.10% 21.01% 24.52% 24.68%
Times Interest 10.46 16.82 18.89 17.21 8.14 31.80 21.70 33.54
Earned Ratio times times times times times times times times
 

Hotel Plaza¶s (former Pan Pacific Hotel Group) debt ratio is much in line with industry

average within the range of +/- 2%, showing that it can meet its liabilities obligations

comfortably.

However, it is observed that the Times Interest Earned Ratio is much lesser that the industry

average for year 2007 to 2009 by almost 60%. Pan Pacific should hence, consider

restructuring its loans and cut down its borrowings for businesses that are not generating

enough revenue or ROI.

 c



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  21.33% 22.72% 24.84% 24.43%
  38.66% 19.47% 25.00% 22.50%
  !
27.30% 20.83% 23.71% 27.11%
"

     

Industry 29.10% 21.01% 24.52% 24.68%

Debt ratio indicates what proportion of debt a company has relative to its assets. The measure
gives an idea to the leverage of the company along with the potential risks the company faces
in terms of its debt-load.

In order for this to mean anything, we compared the result with other years of data for Pan
Pacific, its competitors and the industry average.
Pan Pacific has a higher debt ratio by 2009 than the industry average, whereas its competitors
are below the industry. It reflects that Pan Pacific is slightly more aggressive than its
competitors in use of leverage to enhance the company¶s return on investment. It makes Pan
Pacific looked upon more positive by investors.


 #  $  

     
    
  10.69 times 55.44 times 35.30 times 74.37 times
  3.27 times 19.97 times 10.91 times 9.03 times
  !
10.46 times 16.82 times 18.89 times 17.21 times
"

     

Industry 8.14 times 31.80 times 21.70 times 33.54 times

Another area Pan Pacific could look at to reduce is its borrowing. We noted that as compared
to its competitors, it has lower Times Interest Earned Ratio than the industry average except
for year 2006 which the ratio is at 2 times higher.

While higher debt ratio and lower Times Interest Ratio does not present an immediate threat
to its interest obligations, Pan Pacific could alternatively consider getting better financing
terms from its financers, or cut down on borrowings especially for properties assets.