Carnival Corp. & plc (NYSE:CCL)

Current Ratio

The current ratio exhibited a generally low level from early 2018 through early 2020, hovering mostly below 0.3. Beginning in May 2020, there was a marked increase, peaking at 1.45 in February 2021, indicating a substantial improvement in the company's short-term liquidity during this period. However, from that peak, the ratio steadily declined, falling below 0.5 by November 2023 and further dropping to 0.36 by February 2024. This trend suggests a weakening in the company's ability to cover short-term liabilities with current assets towards the most recent periods.

Quick Ratio

The quick ratio followed a similar trajectory as the current ratio. Initially low, fluctuating below 0.2 through the first quarter of 2020, it surged between May 2020 and February 2021, reaching a high of 1.36. This indicates a significant improvement in liquidity when excluding inventory from current assets. Post-peak, the quick ratio declined continuously, reaching as low as 0.23 by February 2024, reflecting a diminishing capacity to meet immediate obligations without relying on inventory sales.

Cash Ratio

The cash ratio remained very low, below 0.15, from early 2018 until early 2020, similar to the other liquidity measures. A pronounced improvement is observed from May 2020 onwards, peaking at 1.34 in February 2021. This peak period corresponds to a much stronger position in terms of cash and cash equivalents relative to current liabilities. However, the subsequent trend is downward, decreasing steadily to 0.18 by February 2024. The decline implies reduced cash reserves relative to current obligations over the recent periods, which may raise concerns on immediate liquidity.

Current Assets

Over the observed period, current assets showed significant volatility. Initially fluctuating between approximately $1.7 billion and $2.8 billion from early 2018 through early 2020, there was a pronounced increase beginning in May 2020, peaking at about $10.6 billion in November 2020. This spike likely reflects an atypical event or strategic shift. Following this peak, current assets declined steadily, trending downwards to around $4.5 billion by February 2024, indicating a reduction in liquid resources or short-term assets available.

Current Liabilities

Current liabilities increased overall during the period, starting near $8.9 billion in early 2018 and rising beyond $12 billion by early 2024. There was a gradual upward trend with some fluctuations, including a temporary peak around May 2022 near $13.4 billion. The continuous growth in liabilities outpaced the fluctuations seen in assets, which may suggest rising short-term obligations and increased pressure on working capital.

Current Ratio

The current ratio, which measures liquidity by comparing current assets to current liabilities, remained consistently below 1.0 throughout the period, indicating that current liabilities exceeded current assets. Early in the dataset, the ratio was quite low, around 0.2, reflecting limited short-term liquidity. A significant improvement occurred during 2020, with the ratio rising to a peak of approximately 1.45 in February 2021, corresponding with the spike in current assets. This improvement was temporary, as the ratio subsequently declined sharply, falling below 0.5 by early 2024. This downward trend suggests deteriorating short-term financial health and a reduced ability to cover short-term obligations with available assets.

The analysis of the quarterly financial data reveals several key trends related to liquidity and working capital management over the examined periods.

Total Quick Assets

Total quick assets demonstrate significant volatility across the quarters. Initially, there is a moderate fluctuation between approximately 798 million and 1,607 million USD through 2018 and the first half of 2019. A pronounced spike occurs in early 2020, where quick assets surge sharply to values exceeding 7,000 million USD, reaching a peak close to 11,764 million USD in early 2021. However, following this peak, a general declining trend emerges from mid-2021 onward, with total quick assets decreasing consistently to approximately 2,886 million USD by early 2024. This pattern may reflect periodic liquidity injections followed by gradual utilizations or other operational dynamics impacting liquid asset buffers.

Current Liabilities

Current liabilities show a steady upward trajectory over the full time span. Starting near 8,851 million USD in early 2018, liabilities increase moderately, reaching over 10,000 million USD by late 2019. From early 2020 onward, liabilities continue to grow, crossing 11,000 million USD on average, and peaking at nearly 13,000 million USD by mid-2022. Despite some fluctuations towards late 2023 and early 2024, liabilities remain elevated above the earlier period’s baseline, signaling increased short-term obligations and potential pressures on liquidity.

Quick Ratio

The quick ratio, a key indicator of the company’s ability to cover current liabilities with its most liquid assets, exhibits substantial variation. Early periods reflect low ratios, oscillating between 0.09 and 0.18, indicating limited immediate liquidity relative to liabilities. Beginning in early 2020, a marked improvement is observed with the quick ratio rising dramatically above 1.0 by late 2020 and early 2021, peaking at 1.36. This improvement coincides with the surge in quick assets noted above. However, from mid-2021 onwards, the quick ratio declines steadily, dropping below 0.3 by early 2024. This declining trend suggests deteriorating short-term liquidity, with liquid assets covering a smaller portion of current liabilities over time.

In summary, the data indicates periods of enhanced liquidity particularly around 2020 and early 2021, followed by a sustained decrease in both quick assets and quick ratio despite rising current liabilities. This pattern suggests that the company faced increasing short-term financial commitments while its liquid asset base shrank relative to these obligations, potentially impacting its short-term financial stability.

Total Cash Assets

Total cash assets exhibited moderate fluctuations from early 2018 through early 2020, with values ranging roughly between $453 million and $1,354 million. A significant increase is observable starting in May 2020, peaking around November 2020 and February 2021 at approximately $9.5 to $11.5 billion. This sharp rise corresponds with the early period of the COVID-19 pandemic. Subsequently, there is a downtrend from early 2021 through early 2024, with cash assets declining steadily from $11.5 billion to around $2.2 billion by February 2024.

Current Liabilities

Current liabilities remained relatively stable and moderately increasing from 2018 through early 2020, ranging between $8.0 billion and $11.0 billion. Notably, there was an upward movement during the pandemic months, with liabilities peaking around May 2020 at approximately $11.9 billion. Post-2020, current liabilities continued on a general upward trajectory with some fluctuations, reaching approximately $12.4 billion by February 2024.

Cash Ratio

The cash ratio indicates liquidity trends relative to current liabilities. Prior to 2020, the ratio remained low, fluctuating predominantly between 0.05 and 0.13, reflecting relatively limited liquid cash available against current liabilities. In the period from May 2020 through November 2020, the cash ratio experienced a significant increase, peaking at 1.34 in February 2021, reflecting strong liquidity likely due to cash accumulation during the pandemic. After this peak, the cash ratio decreased steadily to about 0.18 by February 2024, indicating a decline in liquid assets relative to liabilities and a return to tighter liquidity levels.

Overall Trends and Insights

The financial data reveal that the company substantially increased its cash assets and boosted liquidity ratios during the onset of the COVID-19 pandemic, likely as a precautionary measure against uncertainty. This increase in cash reserves was accompanied by a rise in current liabilities, suggesting increased short-term obligations during the same period. Following the peak in early 2021, there is a noticeable decline in total cash assets and the cash ratio, implying the company has been drawing down its cash reserves relative to current liabilities. Meanwhile, current liabilities continued a gradual upward trend despite fluctuations, which may indicate ongoing operational or financing obligations. The current liquidity position, as measured by the cash ratio, remains below pre-pandemic peak levels, highlighting a more conservative cash holding stance relative to liabilities in recent periods.