The analyses in questions 1 to 4 were based on the information provided. In reality, companies, banks and investment advisers will have more data and reports available on which to base their decisions. 1. Supplier to Carnival To make a better decision whether or not to become a supplier to Carnival, we should have our own balance sheets and income statements to determine if the average 144 days Carnival takes to pay their suppliers is good for us as suppliers. As suppliers to Carnival, we would not want our suppliers to wait longer to get paid since preferably our own accounts receivable turnover in days should be less than our account payable turnover in days. Therefore, the effect of having Carnival as one of our customers should be calculated …show more content…
Even in this case, we would not decide to become a supplier to Carnival if we can become suppliers to other companies having favourable short-term ratios and who pay their suppliers in less time. 2. Bank Since Carnival are requesting the $1 billion to build a new ship, Carnival needs to present to the bank a business plan showing how they will use this money, by when the new ship will be operational, and the expected increase in sales when this new ship will be operational. From table 3, in 2011, the ROA, ROE and ROS are 6.5%, 9.6% and 14.2% respectively. Therefore, with the introduction of the new ship, the returns due to this new ship alone must be greater than the company’s average so that the company’s overall ROI ratios improve. Hence, if the ROI values of the new ship are respectively less than or equal to the above values, then it will not be worth lending the money to Carnival. If, however, the business plan presented shows that the returns will improve, then the original decision to lend the $1 billion will still