Enterprise Value to FCFF (EV/FCFF)
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
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Free Cash Flow to The Firm (FCFF)
Royal Caribbean Cruises Ltd., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1, 2 See details »
- Operating Activities Cash Flow
- The net cash provided by operating activities exhibited an overall increasing trend from 2017 through 2019, rising from approximately $2.87 billion to about $3.72 billion. However, a dramatic reversal occurred in 2020, with a significant cash outflow of around $3.73 billion, followed by a reduced but still negative outflow of approximately $1.88 billion in 2021. This sharp decline in cash from operations starting in 2020 indicates a substantial impact on the company's operational liquidity during that period.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed considerable volatility over the analyzed timeframe. Initially, in 2017, the FCFF was strong at about $2.58 billion, but it plummeted drastically to roughly $118 million in 2018, suggesting significant constraints or increased capital expenditures despite positive operational cash flow. In 2019, FCFF improved to nearly $990 million, though still well below 2017 levels. The period from 2020 onwards reflects a negative free cash flow scenario, with substantial outflows of approximately $5.22 billion in 2020 and $3.22 billion in 2021. This deterioration aligns with the negative operating cash flow in the same years, indicating ongoing operational and investment challenges impacting the liquidity available to the firm.
- Overall Financial Trends
- The data reveals a clear pattern of robust operational cash generation and free cash flow up to 2019, followed by a pronounced downturn beginning in 2020. The negative cash flows from operations and free cash flow in the last two years highlight significant financial pressure possibly due to adverse market conditions or operational disruptions. The magnitude of the cash outflows suggests increased expenditures and/or decreased revenues substantially impacted cash management and financial flexibility.
Interest Paid, Net of Tax
Royal Caribbean Cruises Ltd., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2 2021 Calculation
Cash paid during the year for interest, net of amount capitalized, tax = Cash paid during the year for interest, net of amount capitalized × EITR
= × =
3 2021 Calculation
Capitalized interest costs, tax = Capitalized interest costs × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate shows a generally fluctuating trend over the five-year period. Starting at 1.11% in 2017, it increased slightly to 1.14% in 2018 and rose more notably to 1.68% in 2019. In 2020, there was a sharp decline to 0.26%, followed by a moderate increase to 0.85% in 2021. This pattern suggests variability in tax rates or tax management strategies, with a significant reduction during 2020 possibly reflecting unusual financial circumstances.
- Cash Paid During the Year for Interest, Net of Amount Capitalized, Net of Tax
- The cash outflow related to interest payments shows a marked upward trend throughout the period. Beginning at approximately $247 million in 2017, the amount remained relatively stable through 2019, fluctuating slightly but staying near the $240 million level. However, there was a sharp increase in 2020 to about $417 million, almost doubling the previous years’ figures. This upward trajectory continued sharply into 2021, reaching over $827 million, nearly doubling again from the prior year. This significant escalation may indicate higher borrowing costs, increased debt levels, or changes in interest rates.
- Capitalized Interest Costs, Net of Tax
- Capitalized interest costs also increased from 2017 to 2019, starting at approximately $24 million in 2017 and more than doubling to around $56 million by 2019. From 2019 to 2020, the costs continued to rise slightly, reaching nearly $59 million, followed by a minor decrease to about $58 million in 2021. While this item shows growth in the early years, it stabilizes around the high $50 million range in the last two years, indicating that the capitalization of interest costs reached a plateau.
Enterprise Value to FCFF Ratio, Current
Royal Caribbean Cruises Ltd., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Airbnb Inc. | |
| Booking Holdings Inc. | |
| Chipotle Mexican Grill Inc. | |
| McDonald’s Corp. | |
| Starbucks Corp. | |
| EV/FCFF, Sector | |
| Consumer Services | |
| EV/FCFF, Industry | |
| Consumer Discretionary | |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Royal Caribbean Cruises Ltd., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
| EV/FCFF, Sector | ||||||
| Consumer Services | ||||||
| EV/FCFF, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value showed a generally fluctuating trend between 2017 and 2021. Initially, EV increased slightly from approximately $35.3 billion in 2017 to about $35.8 billion in 2018. This was followed by a notable decline in 2019 to roughly $29.5 billion. Subsequently, EV surged significantly in 2020 to nearly $37.8 billion and remained relatively stable in 2021, with a slight decrease to around $37.2 billion.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm experienced a sharp decline over the period. Starting at approximately $2.58 billion in 2017, it dropped drastically in 2018 to about $118 million, before recovering somewhat to nearly $989 million in 2019. However, in 2020 and 2021, FCFF turned negative, reaching around -$5.22 billion and -$3.22 billion, respectively, indicating significant cash outflows during these years.
- EV/FCFF Ratio
- The EV/FCFF ratio exhibited extreme volatility in the years where it was calculable. It was 13.69 in 2017, surged dramatically to 303.96 in 2018, and then normalized to 29.82 in 2019. Data for 2020 and 2021 is not available, likely due to negative FCFF values, which do not permit meaningful ratio calculations.
- Insights
- The enterprise value's fluctuations, coupled with the sharp decline and eventual negative free cash flow in later years, suggest operational and financial challenges particularly from 2020 onwards. The negative FCFF indicates that the firm experienced substantial cash deficits, likely driven by higher expenditures or reduced cash inflows. The high EV/FCFF ratios in earlier years reflect either a premium valuation or constrained cash generation, but the absence of these ratios in 2020 and 2021 aligns with the negative cash flows, complicating valuation assessments during this period.