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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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