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Carnival Financial Ratios

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Introduction Carnival Corporation has dominated the cruise travel industry, especially in recent years. Since the birth of the company, they had a simple mission to “deliver joyful vacation experiences and breakthrough shareholder returns by exceeding guest expectations and leveraging our industry-leading scale” (Frizzell, 2018). Shifting competitive strategies at certain times in the company’s lifespan has allowed Carnival to capture a large part of the market and offer very competitive prices at all tiers of consumers. Further analysis of Carnival’s financial ratios reveals that their success doesn’t come from market share alone. In order for Carnival to continue their success, they must continue to adapt to a changing market in order to …show more content…

The operating profit margin is determined by dividing the operating income by revenues and allows you to understand a company’s profitability. Carnivals operating income reported for 2016 was $3,071 million and their revenues were reported at $16,389 million. This would give Carnival a ratio of .188 which places it behind Norwegian (.1899) and ahead of Royal Caribbean (.174) in terms of profitability (). The return on equity of Carnival is calculated by dividing their net income of $2,779 million by the total stockholders’ equity of $22,597 million. The ROE ratio for Carnival will be calculated to be .123. This is last between the three companies and means that their business strategy provides the least return to shareholders’ investments. Carnival’s current ratio was found by dividing their current assets of $1,689 million by their current liabilities of $7,072 million. Carnival ranks first among its competitors with a current ratio of .239 making it the most financially healthy. To find the total debt-to-asset ratio you must divide the total debt of the company by its total assets. Carnival once again has the best ratio at .2146 while Royal Caribbean and Norwegian have ratios of .363 and .450 respectively (). Carnival gains a competitive advantage here because a majority of every dollar earned is not from any debt that they might have. The net profit margin is often used to measure the overall success of a company. Carnival’s profit margin can be calculated by dividing their net income of $2,779 million by their revenues of $16,389 million, giving a ratio of .1696

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The three financial ratios are important tools that judge the leverage, profitability, and liquidity. “Profitability ratios are ratios that measure the rate of return a firm is earning on various measures of investment.” (2018, p. 150) This is important to a business because the whole purpose of a business is to make a profit, profitability shows the business exactly how it is doing and if the business is achieving that goal. “Profitability ratios also have many major ratios one being return-on-equity (ROE), calculated by dividing net income (profit) by owners’ equity, measures the income earned per dollar invested by the stockholders.”

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Operating margin/Return on sales (ROS) is the ratio of operating income divided by net sales or revenue, usually presented in percent. According to gurufocus’ statistics (October, 2015), Costco’s operating margins (3.12%) ranked higher than 53% of the 359 Companies in the Global Discount Stores industry (2.99%). Just like Gross Margin, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions.

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The current ratio is the best way to assess the ability of a company’s capabilities to pay off its short term liabilities with short term assets.

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The Net Profit Margin Ratio denotes the percentage of revenue that is shown in net income after subtracting expenses. Staples saw an increase of 1.2 in this ratio from 2014 to 2015. Office Depot had a ratio of -2.19 in 2014 which increased to a small, positive ratio of 0.06 in 2015. The Gross Profit Percentage ratio demonstrates how much profit was made through each dollar of sales after you subtract the cost of goods sold. Staples had a ratio of 25.79 in 2014 which increased to 26.18 in 2015.

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Net income is determined using the total sales (revenue) from the sales budget in the amount of $175,000, then deducts the cost of goods sold (beginning inventory, cost of manufactured goods, cost of finished goods, and cost of ending inventory) which totals $59,832, to determine a gross margin of $115,168. Then, selling and administrative expenses are deducted to determine the total income from operations and the total income for operations is taxed at 30% leaving a net income of

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Of the multitude of cruise lines that came and went as the cruise industry grew, Renaissance Cruises is one of the few that continues to have a lasting impact more than a decade after it ceased operations. Travelers especially liked the line’s tour approach, providing the full vacation package as well as the affordable luxuries of their 700-passenger ships. Today, its ships remain popular and many of the elements they pioneered are common across the industry. As the cruise industry grew, much of the focus was on the broad market with firms such as Norwegian Caribbean Lines, Royal Caribbean Cruise Line and Carnival Cruise Lines, earning their reputations for providing fun vacations.

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However, care must be taken that you do not fall into the traps of thinking that profits are everything. There are many other metrics just as essential for ensuring sustainable profitability. Net Profit Margin Net profit margin is the percentage of the revenue which is net profit.

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Whether it is trade, culture, business, sports, science and technology or crime fighting, the effect of globalization is readily apparent all around us. One industry which has grown exponentially from the trend towards globalization is the cruise ship industry. Cruise tourism is now the fastest growing segment of the global tourism industry and nowhere is this more evident than in the Caribbean where

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