Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Carnival Corp. & plc, solvency ratios
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
The solvency profile reveals a period of extreme financial stress beginning in 2020, characterized by a dramatic increase in leverage and a collapse in the ability to service debt. While 2018 and 2019 demonstrated a conservative capital structure and strong coverage, the subsequent years show a heavy reliance on debt financing to maintain operations, peaking in 2022 before showing marginal signs of stabilization in 2023.
- Leverage and Capital Structure
- A significant escalation in debt levels is evident across all primary leverage metrics. The debt to equity ratio rose from 0.42 in 2018 to a peak of 4.89 in 2022, ending at 4.44 in 2023. Similarly, the debt to capital ratio increased from 0.30 in 2018 to 0.82 in 2023, indicating that debt now constitutes the vast majority of the company's capital structure. The inclusion of operating lease liabilities consistently mirrors these trends, slightly amplifying the perceived leverage.
- Asset Financing and Financial Leverage
- The debt to assets ratio climbed from 0.24 in 2018 to 0.62 in 2023, with a peak of 0.67 in 2022, demonstrating that over 60% of total assets are now financed through debt. This is further reflected in the financial leverage ratio, which spiked from 1.73 in 2018 to 7.14 in 2023, peaking at 7.32 in 2022. These figures indicate a substantial increase in financial risk and a high degree of gearing.
- Debt Serviceability
- A critical deterioration in coverage ratios occurred starting in 2020. The interest coverage ratio fell from a robust 17.53 in 2018 to -10.46 in 2020, remaining negative through 2022. By November 30, 2023, the ratio returned to a positive value of 0.97, suggesting the company has barely reached a point where operating earnings can cover interest expenses. The fixed charge coverage ratio followed an identical trajectory, mirroring the instability in earnings relative to fixed obligations.
The transition from 2022 to 2023 marks a pivot point. A modest reduction in the debt to equity and debt to assets ratios, combined with the return to positive interest coverage, suggests the initiation of a recovery phase and a slight reduction in the overall solvency risk, although levels remain significantly elevated compared to pre-2020 benchmarks.
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Debt to Equity
Carnival Corp. & plc, debt to equity calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term borrowings | —) | 200) | 2,790) | 3,084) | 231) | 848) | |
| Current portion of long-term debt | 2,089) | 2,393) | 1,927) | 1,742) | 1,596) | 1,578) | |
| Long-term debt, excluding current portion | 28,483) | 31,953) | 28,509) | 22,130) | 9,675) | 7,897) | |
| Total debt | 30,572) | 34,546) | 33,226) | 26,956) | 11,502) | 10,323) | |
| Shareholders’ equity | 6,882) | 7,065) | 12,144) | 20,555) | 25,365) | 24,443) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 4.44 | 4.89 | 2.74 | 1.31 | 0.45 | 0.42 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Airbnb Inc. | 0.24 | 0.36 | 0.42 | — | — | — | |
| Booking Holdings Inc. | — | 4.51 | 1.77 | — | — | — | |
| Chipotle Mexican Grill Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| DoorDash, Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | — | |
| Debt to Equity, Sector | |||||||
| Consumer Services | 28.03 | 24.19 | 7.90 | — | — | — | |
| Debt to Equity, Industry | |||||||
| Consumer Discretionary | 1.34 | 1.51 | 1.50 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 30,572 ÷ 6,882 = 4.44
2 Click competitor name to see calculations.
A significant deterioration in the solvency profile is evident between 2018 and 2023. The capital structure shifted from a conservative leverage position to one characterized by high debt levels relative to equity, though a slight corrective trend emerged in the final year of the period.
- Total Debt Trends
- Total debt remained relatively stable between 2018 and 2019 before experiencing a sharp escalation starting in 2020. Obligations rose from 11,502 million US$ in 2019 to a peak of 34,546 million US$ in 2022. A subsequent reduction to 30,572 million US$ was recorded in 2023, indicating the initiation of a deleveraging phase.
- Shareholders' Equity Trends
- Equity levels exhibited a consistent and severe decline following 2019. From a peak of 25,365 million US$ in 2019, shareholders' equity eroded to 6,882 million US$ by 2023. This contraction indicates a substantial depletion of the equity cushion over the five-year period.
- Debt to Equity Ratio Analysis
- The debt to equity ratio reflects the compounding effect of rising liabilities and diminishing equity. The ratio increased from 0.42 in 2018 to a peak of 4.89 in 2022. While the ratio improved slightly to 4.44 in 2023, the current level represents a marked increase in financial leverage and solvency risk compared to the 2018-2019 baseline.
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Debt to Equity (including Operating Lease Liability)
Carnival Corp. & plc, debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term borrowings | —) | 200) | 2,790) | 3,084) | 231) | 848) | |
| Current portion of long-term debt | 2,089) | 2,393) | 1,927) | 1,742) | 1,596) | 1,578) | |
| Long-term debt, excluding current portion | 28,483) | 31,953) | 28,509) | 22,130) | 9,675) | 7,897) | |
| Total debt | 30,572) | 34,546) | 33,226) | 26,956) | 11,502) | 10,323) | |
| Current portion of operating lease liabilities | 149) | 146) | 142) | 151) | —) | —) | |
| Long-term operating lease liabilities | 1,170) | 1,189) | 1,239) | 1,273) | —) | —) | |
| Total debt (including operating lease liability) | 31,891) | 35,881) | 34,607) | 28,380) | 11,502) | 10,323) | |
| Shareholders’ equity | 6,882) | 7,065) | 12,144) | 20,555) | 25,365) | 24,443) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 4.63 | 5.08 | 2.85 | 1.38 | 0.45 | 0.42 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Airbnb Inc. | 0.28 | 0.42 | 0.51 | — | — | — | |
| Booking Holdings Inc. | — | 4.75 | 1.85 | — | — | — | |
| Chipotle Mexican Grill Inc. | 1.32 | 1.58 | 1.53 | — | — | — | |
| DoorDash, Inc. | 0.08 | 0.08 | 0.09 | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Consumer Services | 38.47 | 33.45 | 11.35 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 1.69 | 1.90 | 1.87 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Shareholders’ equity
= 31,891 ÷ 6,882 = 4.63
2 Click competitor name to see calculations.
The financial trajectory from 2018 to 2023 indicates a significant shift in the capital structure, characterized by a sharp increase in leverage and a corresponding decline in equity.
- Total Debt Trends
- A substantial increase in total debt, including operating lease liabilities, occurred between 2019 and 2022. Debt levels rose from 11,502 million US dollars in 2019 to a peak of 35,881 million US dollars in 2022. A moderate reduction to 31,891 million US dollars was observed in 2023, suggesting the initiation of a deleveraging process.
- Shareholders' Equity Erosion
- Shareholders' equity experienced a steady and severe decline starting after 2019. From a peak of 25,365 million US dollars in 2019, equity contracted to 6,882 million US dollars by 2023. This continuous erosion reflects a significant reduction in the capital cushion available to absorb losses.
- Debt to Equity Ratio Analysis
- The debt to equity ratio demonstrates a dramatic escalation in financial leverage. The ratio remained stable and low between 2018 and 2019, ranging from 0.42 to 0.45, before climbing steeply to 1.38 in 2020 and peaking at 5.08 in 2022. Although the ratio improved slightly to 4.63 in 2023, the current solvency position remains highly leveraged compared to the 2018-2019 period, indicating a heightened reliance on borrowed funds to maintain operations.
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Debt to Capital
Carnival Corp. & plc, debt to capital calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term borrowings | —) | 200) | 2,790) | 3,084) | 231) | 848) | |
| Current portion of long-term debt | 2,089) | 2,393) | 1,927) | 1,742) | 1,596) | 1,578) | |
| Long-term debt, excluding current portion | 28,483) | 31,953) | 28,509) | 22,130) | 9,675) | 7,897) | |
| Total debt | 30,572) | 34,546) | 33,226) | 26,956) | 11,502) | 10,323) | |
| Shareholders’ equity | 6,882) | 7,065) | 12,144) | 20,555) | 25,365) | 24,443) | |
| Total capital | 37,454) | 41,611) | 45,370) | 47,511) | 36,867) | 34,766) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.82 | 0.83 | 0.73 | 0.57 | 0.31 | 0.30 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Airbnb Inc. | 0.20 | 0.26 | 0.29 | — | — | — | |
| Booking Holdings Inc. | 1.24 | 0.82 | 0.64 | — | — | — | |
| Chipotle Mexican Grill Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| DoorDash, Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| McDonald’s Corp. | 1.13 | 1.19 | 1.15 | — | — | — | |
| Starbucks Corp. | 2.08 | 2.41 | 1.57 | 1.96 | — | — | |
| Debt to Capital, Sector | |||||||
| Consumer Services | 0.97 | 0.96 | 0.89 | — | — | — | |
| Debt to Capital, Industry | |||||||
| Consumer Discretionary | 0.57 | 0.60 | 0.60 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 30,572 ÷ 37,454 = 0.82
2 Click competitor name to see calculations.
An analysis of the solvency metrics from November 30, 2018, to November 30, 2023, reveals a significant shift in the capital structure, characterized by a substantial increase in leverage and a subsequent attempt at stabilization.
- Total Debt Trends
- Total debt remained relatively stable between 2018 and 2019, increasing slightly from 10,323 million to 11,502 million. However, a sharp escalation occurred starting in 2020, with debt levels more than doubling to 26,956 million, and continuing to rise through 2022 to a peak of 34,546 million. A modest reduction is observed in 2023, as total debt declined to 30,572 million.
- Total Capital Evolution
- Total capital experienced an upward trajectory from 34,766 million in 2018 to a peak of 47,511 million in 2020. Following this peak, a consistent downward trend is observed over the subsequent three years, with total capital decreasing to 37,454 million by November 30, 2023.
- Debt to Capital Ratio Analysis
- The debt to capital ratio demonstrates a marked increase in financial leverage over the observed period. The ratio was stable at approximately 0.30 to 0.31 in 2018 and 2019, then rose sharply to 0.57 in 2020. This upward trend intensified in 2021 and 2022, reaching a maximum of 0.83. By 2023, the ratio remained elevated at 0.82, indicating that debt continues to constitute a dominant portion of the total capital structure.
The convergence of rising total debt and declining total capital after 2020 has resulted in a significantly higher solvency risk profile. While the absolute level of debt began to decrease in 2023, the high debt to capital ratio suggests a continued reliance on borrowed funds relative to the total capital base.
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Debt to Capital (including Operating Lease Liability)
Carnival Corp. & plc, debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term borrowings | —) | 200) | 2,790) | 3,084) | 231) | 848) | |
| Current portion of long-term debt | 2,089) | 2,393) | 1,927) | 1,742) | 1,596) | 1,578) | |
| Long-term debt, excluding current portion | 28,483) | 31,953) | 28,509) | 22,130) | 9,675) | 7,897) | |
| Total debt | 30,572) | 34,546) | 33,226) | 26,956) | 11,502) | 10,323) | |
| Current portion of operating lease liabilities | 149) | 146) | 142) | 151) | —) | —) | |
| Long-term operating lease liabilities | 1,170) | 1,189) | 1,239) | 1,273) | —) | —) | |
| Total debt (including operating lease liability) | 31,891) | 35,881) | 34,607) | 28,380) | 11,502) | 10,323) | |
| Shareholders’ equity | 6,882) | 7,065) | 12,144) | 20,555) | 25,365) | 24,443) | |
| Total capital (including operating lease liability) | 38,773) | 42,946) | 46,751) | 48,935) | 36,867) | 34,766) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.82 | 0.84 | 0.74 | 0.58 | 0.31 | 0.30 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Airbnb Inc. | 0.22 | 0.30 | 0.34 | — | — | — | |
| Booking Holdings Inc. | 1.22 | 0.83 | 0.65 | — | — | — | |
| Chipotle Mexican Grill Inc. | 0.57 | 0.61 | 0.61 | — | — | — | |
| DoorDash, Inc. | 0.07 | 0.07 | 0.08 | — | — | — | |
| McDonald’s Corp. | 1.10 | 1.14 | 1.10 | — | — | — | |
| Starbucks Corp. | 1.48 | 1.58 | 1.29 | 1.46 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Consumer Services | 0.97 | 0.97 | 0.92 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.63 | 0.65 | 0.65 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 31,891 ÷ 38,773 = 0.82
2 Click competitor name to see calculations.
The solvency profile demonstrates a significant escalation in leverage between 2018 and 2023, characterized by a substantial increase in total debt relative to total capital. After a period of stability, a sharp upward trajectory in borrowing began in 2020, leading to a fundamental shift in the capital structure that peaked in 2022 before showing early signs of stabilization in 2023.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained relatively stable between 2018 and 2019, moving from US$ 10,323 million to US$ 11,502 million. However, a dramatic increase is observed in 2020, where debt rose to US$ 28,380 million, followed by further expansion to a peak of US$ 35,881 million in 2022. By November 30, 2023, a reduction to US$ 31,891 million indicates the commencement of a deleveraging process.
- Total Capital Evolution
- Total capital experienced a peak in 2020 at US$ 48,935 million. Following this peak, a consistent downward trend occurred over the subsequent three years, with capital decreasing to US$ 46,751 million in 2021, US$ 42,946 million in 2022, and US$ 38,773 million in 2023. This contraction in the capital base occurred simultaneously with high debt levels, further intensifying the leverage ratio.
- Debt to Capital Ratio Analysis
- The debt to capital ratio reflects a sharp transition from a conservative solvency position to a high-leverage state. The ratio rose marginally from 0.30 in 2018 to 0.31 in 2019, then surged to 0.58 in 2020 and 0.74 in 2021. The ratio reached its maximum of 0.84 in 2022, indicating that debt comprised the vast majority of the capital structure. A slight decrease to 0.82 in 2023 suggests a marginal improvement in the solvency position.
The overall trend indicates that the organization underwent a period of aggressive debt accumulation starting in 2020, which caused the debt to capital ratio to nearly triple from its 2018 levels. While total debt began to decline in the final year of the analysis, the solvency ratio remains significantly elevated compared to the pre-2020 baseline.
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Debt to Assets
Carnival Corp. & plc, debt to assets calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term borrowings | —) | 200) | 2,790) | 3,084) | 231) | 848) | |
| Current portion of long-term debt | 2,089) | 2,393) | 1,927) | 1,742) | 1,596) | 1,578) | |
| Long-term debt, excluding current portion | 28,483) | 31,953) | 28,509) | 22,130) | 9,675) | 7,897) | |
| Total debt | 30,572) | 34,546) | 33,226) | 26,956) | 11,502) | 10,323) | |
| Total assets | 49,120) | 51,703) | 53,344) | 53,593) | 45,058) | 42,401) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.62 | 0.67 | 0.62 | 0.50 | 0.26 | 0.24 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Airbnb Inc. | 0.10 | 0.12 | 0.14 | — | — | — | |
| Booking Holdings Inc. | 0.59 | 0.49 | 0.46 | — | — | — | |
| Chipotle Mexican Grill Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| DoorDash, Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| McDonald’s Corp. | 0.73 | 0.74 | 0.66 | — | — | — | |
| Starbucks Corp. | 0.52 | 0.53 | 0.47 | 0.54 | — | — | |
| Debt to Assets, Sector | |||||||
| Consumer Services | 0.49 | 0.49 | 0.46 | — | — | — | |
| Debt to Assets, Industry | |||||||
| Consumer Discretionary | 0.34 | 0.35 | 0.36 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 30,572 ÷ 49,120 = 0.62
2 Click competitor name to see calculations.
The financial data indicates a significant shift in the solvency profile between November 30, 2018, and November 30, 2023. A period of substantial leverage expansion occurred between 2019 and 2022, followed by a slight contraction in the most recent fiscal year.
- Total Debt Trends
- A sharp upward trajectory in total debt is observed, rising from US$ 10,323 million in 2018 to a peak of US$ 34,546 million in 2022. The most aggressive increase occurred between 2019 and 2020, where debt more than doubled from US$ 11,502 million to US$ 26,956 million. As of November 30, 2023, a reduction in total debt to US$ 30,572 million is noted, marking the first decrease in the five-year period.
- Total Asset Dynamics
- Total assets experienced an initial increase, peaking at US$ 53,593 million in 2020. However, a consistent downward trend followed, with assets declining to US$ 49,120 million by November 30, 2023. This contraction in the asset base occurred simultaneously with the period of highest indebtedness, compounding the impact on solvency ratios.
- Debt to Assets Ratio Analysis
- The debt to assets ratio reflects a substantial increase in financial leverage. The ratio grew from a stable 0.24 in 2018 to a peak of 0.67 in 2022, indicating that by 2022, approximately 67% of assets were financed through debt. In 2023, the ratio moderated to 0.62, driven by the reduction in total debt despite the continuing decline in total assets.
The overall trend demonstrates a transition from a conservative capital structure in 2018 to a highly leveraged position by 2022. While the slight improvement in 2023 suggests the beginning of a deleveraging process, the solvency position remains significantly more strained than the 2018-2019 baseline.
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Debt to Assets (including Operating Lease Liability)
Carnival Corp. & plc, debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Short-term borrowings | —) | 200) | 2,790) | 3,084) | 231) | 848) | |
| Current portion of long-term debt | 2,089) | 2,393) | 1,927) | 1,742) | 1,596) | 1,578) | |
| Long-term debt, excluding current portion | 28,483) | 31,953) | 28,509) | 22,130) | 9,675) | 7,897) | |
| Total debt | 30,572) | 34,546) | 33,226) | 26,956) | 11,502) | 10,323) | |
| Current portion of operating lease liabilities | 149) | 146) | 142) | 151) | —) | —) | |
| Long-term operating lease liabilities | 1,170) | 1,189) | 1,239) | 1,273) | —) | —) | |
| Total debt (including operating lease liability) | 31,891) | 35,881) | 34,607) | 28,380) | 11,502) | 10,323) | |
| Total assets | 49,120) | 51,703) | 53,344) | 53,593) | 45,058) | 42,401) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.65 | 0.69 | 0.65 | 0.53 | 0.26 | 0.24 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Airbnb Inc. | 0.11 | 0.15 | 0.18 | — | — | — | |
| Booking Holdings Inc. | 0.62 | 0.52 | 0.48 | — | — | — | |
| Chipotle Mexican Grill Inc. | 0.50 | 0.54 | 0.53 | — | — | — | |
| DoorDash, Inc. | 0.05 | 0.05 | 0.06 | — | — | — | |
| McDonald’s Corp. | 0.95 | 0.97 | 0.92 | — | — | — | |
| Starbucks Corp. | 0.83 | 0.84 | 0.75 | 0.84 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Consumer Services | 0.67 | 0.67 | 0.67 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.43 | 0.44 | 0.44 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 31,891 ÷ 49,120 = 0.65
2 Click competitor name to see calculations.
A significant shift in the solvency profile is evident between 2018 and 2023, characterized by a substantial increase in leverage followed by a recent period of modest contraction. The solvency position deteriorated rapidly starting in 2020, resulting in a peak leverage ratio in 2022.
- Total Debt Trajectory
- Total debt, including operating lease liabilities, remained relatively stable between 2018 and 2019. An acute surge occurred in 2020, with debt increasing from US$ 11,502 million to US$ 28,380 million. This upward trajectory persisted until 2022, reaching a maximum of US$ 35,881 million, before retreating to US$ 31,891 million in 2023.
- Total Asset Performance
- Total assets grew from US$ 42,401 million in 2018 to a peak of US$ 53,593 million in 2020. Since 2020, a consistent downward trend has been observed, with the asset base contracting to US$ 49,120 million by the end of 2023.
- Debt to Assets Ratio Interpretation
- The debt-to-assets ratio expanded from 0.24 in 2018 to a peak of 0.69 in 2022. The most pronounced increase occurred between 2019 and 2020, during which the ratio rose from 0.26 to 0.53. A moderate improvement is noted in 2023, with the ratio declining to 0.65, indicating that the reduction in total debt outweighed the simultaneous decline in total assets.
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Financial Leverage
Carnival Corp. & plc, financial leverage calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 49,120) | 51,703) | 53,344) | 53,593) | 45,058) | 42,401) | |
| Shareholders’ equity | 6,882) | 7,065) | 12,144) | 20,555) | 25,365) | 24,443) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 7.14 | 7.32 | 4.39 | 2.61 | 1.78 | 1.73 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Airbnb Inc. | 2.53 | 2.88 | 2.87 | — | — | — | |
| Booking Holdings Inc. | — | 9.12 | 3.83 | — | — | — | |
| Chipotle Mexican Grill Inc. | 2.63 | 2.93 | 2.90 | — | — | — | |
| DoorDash, Inc. | 1.59 | 1.45 | 1.46 | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | — | |
| Financial Leverage, Sector | |||||||
| Consumer Services | 57.76 | 49.57 | 17.02 | — | — | — | |
| Financial Leverage, Industry | |||||||
| Consumer Discretionary | 3.95 | 4.32 | 4.22 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 49,120 ÷ 6,882 = 7.14
2 Click competitor name to see calculations.
The solvency profile of the organization underwent a significant transformation between 2018 and 2023, characterized by a substantial increase in financial risk and a marked shift in the capital structure. The period is defined by an erosion of equity and a concurrent rise in debt-funded asset financing.
- Total Assets
- Assets experienced an initial growth phase, rising from US$ 42,401 million in 2018 to a peak of US$ 53,593 million in 2020. Following this peak, a gradual downward trend is observed, with assets declining to US$ 49,120 million by November 30, 2023.
- Shareholders’ Equity
- A severe and consistent decline in shareholders' equity is evident. After peaking at US$ 25,365 million in 2019, equity fell precipitously to US$ 6,882 million by 2023. The most aggressive contraction occurred between 2020 and 2022, during which equity dropped from US$ 20,555 million to US$ 7,065 million, representing a significant reduction in the company's net worth.
- Financial Leverage
- The financial leverage ratio demonstrates a sharp upward trajectory, moving from 1.73 in 2018 to a peak of 7.32 in 2022. This indicates that the organization transitioned from a moderately leveraged position to a highly leveraged one, where assets are predominantly financed through debt rather than equity. While the ratio saw a marginal decrease to 7.14 in 2023, the level of leverage remains substantially higher than the 2018-2019 baseline.
The divergence between the asset trend and the equity trend explains the spike in financial leverage. While total assets remained relatively high through 2022, the collapsing equity base caused the leverage ratio to multiply, signaling a heightened risk profile and a reduced capacity to absorb financial losses.
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Interest Coverage
Carnival Corp. & plc, interest coverage calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income (loss) | (74) | (6,093) | (9,501) | (10,236) | 2,990) | 3,152) | |
| Add: Income tax expense | 12) | 13) | (21) | (17) | 71) | 54) | |
| Add: Interest expense, net of capitalized interest | 2,066) | 1,609) | 1,601) | 895) | 206) | 194) | |
| Earnings before interest and tax (EBIT) | 2,004) | (4,471) | (7,921) | (9,358) | 3,267) | 3,400) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 0.97 | -2.78 | -4.95 | -10.46 | 15.86 | 17.53 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Airbnb Inc. | 26.33 | 83.88 | 0.31 | — | — | — | |
| Booking Holdings Inc. | 7.11 | 11.03 | 5.39 | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | |
| DoorDash, Inc. | — | -698.50 | -32.07 | — | — | — | |
| McDonald’s Corp. | 8.73 | 7.48 | 8.70 | — | — | — | |
| Starbucks Corp. | 10.82 | 9.76 | 12.40 | 3.66 | — | — | |
| Interest Coverage, Sector | |||||||
| Consumer Services | 9.51 | 9.43 | 7.55 | — | — | — | |
| Interest Coverage, Industry | |||||||
| Consumer Discretionary | 12.23 | 9.30 | 13.23 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,004 ÷ 2,066 = 0.97
2 Click competitor name to see calculations.
The analysis of interest coverage indicates a period of severe financial distress followed by an emerging recovery. A stark contrast is observed between the stable operational performance of 2018-2019 and the significant volatility experienced from 2020 through 2023.
- Operational Earnings Trends
- Earnings before interest and tax (EBIT) remained strong and stable through 2019, exceeding 3.2 billion USD. However, a precipitous decline occurred in 2020, with EBIT falling to negative 9.358 billion USD. While the losses narrowed gradually over the next two years, returning to positive territory in 2023 with 2.004 billion USD, the 2023 level remains significantly below the pre-2020 baseline.
- Interest Expense Expansion
- Net interest expenses exhibited a consistent upward trajectory over the six-year period. Expenses rose from 194 million USD in 2018 to 2.066 billion USD in 2023. A significant acceleration in interest costs began in 2020, coinciding with the collapse in EBIT, suggesting a substantial increase in debt obligations to sustain operations during periods of negative cash flow.
- Interest Coverage Ratio Volatility
- The interest coverage ratio reflects a critical decline in solvency. Between 2018 and 2019, the ratio was robust, ranging from 17.53 to 15.86, indicating an ample margin to service debt. From 2020 to 2022, the ratio turned negative, reaching a nadir of -10.46 in 2020, which signifies that operational earnings were insufficient to cover interest payments. By 2023, the ratio improved to 0.97, indicating that while the company has returned to operational profitability, EBIT is still marginally insufficient to fully cover net interest expenses.
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Fixed Charge Coverage
Carnival Corp. & plc, fixed charge coverage calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income (loss) | (74) | (6,093) | (9,501) | (10,236) | 2,990) | 3,152) | |
| Add: Income tax expense | 12) | 13) | (21) | (17) | 71) | 54) | |
| Add: Interest expense, net of capitalized interest | 2,066) | 1,609) | 1,601) | 895) | 206) | 194) | |
| Earnings before interest and tax (EBIT) | 2,004) | (4,471) | (7,921) | (9,358) | 3,267) | 3,400) | |
| Add: Operating lease expense | 213) | 192) | 203) | 203) | —) | —) | |
| Earnings before fixed charges and tax | 2,217) | (4,279) | (7,718) | (9,155) | 3,267) | 3,400) | |
| Interest expense, net of capitalized interest | 2,066) | 1,609) | 1,601) | 895) | 206) | 194) | |
| Operating lease expense | 213) | 192) | 203) | 203) | —) | —) | |
| Fixed charges | 2,279) | 1,801) | 1,804) | 1,098) | 206) | 194) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 0.97 | -2.38 | -4.28 | -8.34 | 15.86 | 17.53 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Airbnb Inc. | 15.91 | 20.69 | 0.42 | — | — | — | |
| Booking Holdings Inc. | 6.09 | 8.12 | 3.82 | — | — | — | |
| Chipotle Mexican Grill Inc. | 4.71 | 3.98 | 3.23 | — | — | — | |
| DoorDash, Inc. | -3.94 | -15.86 | -6.02 | — | — | — | |
| McDonald’s Corp. | 4.62 | 3.92 | 4.32 | — | — | — | |
| Starbucks Corp. | 3.51 | 3.08 | 3.61 | 1.58 | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Consumer Services | 4.61 | 4.03 | 3.55 | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Consumer Discretionary | 4.95 | 3.65 | 5.60 | — | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,217 ÷ 2,279 = 0.97
2 Click competitor name to see calculations.
The solvency profile exhibits a period of extreme volatility, characterized by a severe collapse in earnings and a simultaneous surge in fixed obligations between 2020 and 2022. While a recovery in profitability is evident by 2023, the capacity to service fixed charges remains constrained relative to pre-2020 levels.
- Earnings Before Fixed Charges and Tax
- Earnings remained relatively stable through 2019 before plummeting to -9,155 million in 2020. A phased recovery followed, with losses narrowing to -4,279 million by 2022 and finally returning to a positive value of 2,217 million in 2023.
- Fixed Charges
- Fixed obligations experienced a dramatic increase, rising from 206 million in 2019 to 1,098 million in 2020. This upward trend continued, peaking at 2,279 million in 2023, which represents a substantial expansion of the company's fixed financial burden over the six-year period.
- Fixed Charge Coverage Ratio
- The coverage ratio declined from a robust 17.53 in 2018 to deep negative territory during the 2020-2022 interval, reflecting a period where earnings were insufficient to meet fixed obligations. The return to a positive ratio of 0.97 in 2023 indicates that earnings are now nearly sufficient to cover these charges, although the margin of safety is significantly lower than the historical baseline.
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