Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Royal Caribbean Cruises Ltd., liquidity ratios
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Current ratio | 0.49 | 0.95 | 0.15 | 0.17 | 0.18 | |
| Quick ratio | 0.43 | 0.87 | 0.07 | 0.09 | 0.09 | |
| Cash ratio | 0.37 | 0.81 | 0.03 | 0.04 | 0.03 |
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).
- Current Ratio
- The current ratio exhibits a pronounced fluctuation over the analyzed period. It starts at a notably low level of 0.18 in 2017 and slightly declines to 0.15 by 2019, indicating limited short-term liquidity during these years. A significant improvement occurs in 2020, with the ratio rising sharply to 0.95, suggesting enhanced ability to cover current liabilities with current assets. However, this upward trend partially reverses in 2021, where the ratio decreases to 0.49, implying a reduction in short-term liquidity compared to the prior year but still remaining above pre-2020 values.
- Quick Ratio
- The quick ratio follows a pattern similar to the current ratio, reflecting changes in more liquid assets. It remains quite low from 2017 to 2019, fluctuating around 0.07 to 0.09, denoting a constrained capacity to cover current liabilities without relying on inventory. A substantial increase occurs in 2020, reaching 0.87, indicative of improved liquidity likely due to increased cash or receivables relative to current liabilities. The ratio then declines to 0.43 in 2021, which, while lower than the peak in 2020, still represents an improvement relative to the years before 2020.
- Cash Ratio
- The cash ratio remains particularly low from 2017 through 2019, averaging around 0.03 to 0.04, showing minimal cash or cash equivalents relative to current liabilities. This situation shifts markedly in 2020, with a dramatic rise to 0.81, signifying a strong liquidity position in terms of immediately available cash resources. Despite a decline to 0.37 in 2021, the cash ratio remains substantially higher than during the years preceding 2020, indicating a sustained increase in liquid assets relative to obligations.
- Overall Analysis
- The liquidity ratios reveal a consistent pattern of minimal liquidity from 2017 to 2019, followed by a dramatic enhancement in 2020, likely in response to new circumstances or financial strategies undertaken during that year. The subsequent decline in 2021 suggests some reversion toward earlier liquidity levels but still represents a maintained improvement compared to the pre-2020 period. This may indicate a strategic adjustment to balance liquidity with other financial priorities after an initial response to a more uncertain environment.
Current Ratio
Royal Caribbean Cruises Ltd., current ratio 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) | ||||||
| Current assets | 3,600,271) | 4,311,747) | 1,162,628) | 1,242,044) | 843,028) | |
| Current liabilities | 7,285,683) | 4,537,121) | 7,952,896) | 7,112,165) | 4,790,264) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 0.49 | 0.95 | 0.15 | 0.17 | 0.18 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Airbnb Inc. | 1.95 | 1.73 | — | — | — | |
| Booking Holdings Inc. | 2.10 | 3.56 | — | — | — | |
| Chipotle Mexican Grill Inc. | 1.58 | 1.73 | — | — | — | |
| DoorDash, Inc. | 2.59 | 3.94 | — | — | — | |
| McDonald’s Corp. | 1.78 | 1.01 | — | — | — | |
| Starbucks Corp. | 1.20 | 1.06 | 0.92 | — | — | |
| Current Ratio, Sector | ||||||
| Consumer Services | 1.77 | 1.73 | — | — | — | |
| Current Ratio, Industry | ||||||
| Consumer Discretionary | 1.25 | 1.19 | — | — | — | |
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 2021 Calculation
Current ratio = Current assets ÷ Current liabilities
= 3,600,271 ÷ 7,285,683 = 0.49
2 Click competitor name to see calculations.
- Current Assets
- The current assets showed an increasing trend from 2017 to 2020, rising from approximately 843 million US dollars to over 4.3 billion US dollars, indicating a significant accumulation of short-term resources. However, in 2021, current assets decreased to around 3.6 billion US dollars, suggesting a reduction compared to the previous year but still markedly higher than the levels observed before 2020.
- Current Liabilities
- Current liabilities exhibited a rising pattern over the five-year period, increasing from about 4.79 billion US dollars in 2017 to a peak of roughly 7.95 billion US dollars in 2019. Thereafter, there was a decline to approximately 4.54 billion US dollars in 2020, followed by a sharp increase again to nearly 7.29 billion US dollars in 2021. This fluctuation highlights volatility in the company's short-term obligations.
- Current Ratio
- The current ratio remained low from 2017 through 2019, staying below 0.2, which suggested limited short-term liquidity relative to current liabilities. In 2020, there was a marked improvement to 0.95, indicating near parity between current assets and current liabilities, a significant shift likely reflecting strategic liquidity management during that period. However, in 2021, the current ratio declined again to 0.49, indicating a reduced liquidity position but still higher than the levels prior to 2020.
- Summary
- Overall, the financial data reveals considerable changes in short-term asset and liability balances over the five-year span. The substantial increase in current assets during 2020, coupled with a reduction in current liabilities, led to a significant improvement in the current ratio, suggesting enhanced liquidity during that year. However, the subsequent decline in both current assets and the current ratio in 2021, along with a rebound in liabilities, indicates a return to a more constrained liquidity position relative to the peak in 2020. These fluctuations may reflect responses to changing business or economic conditions impacting working capital management.
Quick Ratio
Royal Caribbean Cruises Ltd., quick ratio 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) | ||||||
| Cash and cash equivalents | 2,701,770) | 3,684,474) | 243,738) | 287,852) | 120,112) | |
| Trade and other receivables, net of allowances | 408,067) | 284,149) | 305,821) | 324,507) | 318,641) | |
| Total quick assets | 3,109,837) | 3,968,623) | 549,559) | 612,359) | 438,753) | |
| Current liabilities | 7,285,683) | 4,537,121) | 7,952,896) | 7,112,165) | 4,790,264) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 0.43 | 0.87 | 0.07 | 0.09 | 0.09 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Airbnb Inc. | 1.91 | 1.69 | — | — | — | |
| Booking Holdings Inc. | 2.00 | 3.38 | — | — | — | |
| Chipotle Mexican Grill Inc. | 1.35 | 1.28 | — | — | — | |
| DoorDash, Inc. | 2.33 | 3.67 | — | — | — | |
| McDonald’s Corp. | 1.64 | 0.90 | — | — | — | |
| Starbucks Corp. | 0.93 | 0.75 | 0.59 | — | — | |
| Quick Ratio, Sector | ||||||
| Consumer Services | 1.61 | 1.54 | — | — | — | |
| Quick Ratio, Industry | ||||||
| Consumer Discretionary | 0.93 | 0.89 | — | — | — | |
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 2021 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 3,109,837 ÷ 7,285,683 = 0.43
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations over the five-year period, particularly in liquidity and the relationship between quick assets and current liabilities.
- Total Quick Assets
- Over the period from 2017 to 2021, total quick assets exhibited a marked increase beginning in 2020. Values rose from 438,753 thousand US dollars in 2017 to a peak of 3,968,623 thousand US dollars in 2020, followed by a slight decline to 3,109,837 thousand US dollars in 2021. This denotes a substantial strengthening in easily liquidatable assets during 2020, which remained elevated in 2021 compared to pre-2020 levels.
- Current Liabilities
- Current liabilities increased broadly over the period, although with some volatility. Starting at 4,790,264 thousand US dollars in 2017, the amount peaked at 7,952,896 thousand US dollars in 2019, decreased notably to 4,537,121 thousand US dollars in 2020, then rose again to 7,285,683 thousand US dollars in 2021. This pattern suggests varying short-term obligations, with a significant reduction in 2020 before rebounding sharply in 2021.
- Quick Ratio
- The quick ratio, which reflects the company's ability to cover current liabilities with quick assets, remained low and relatively stable from 2017 to 2019 (0.09, 0.09, and 0.07 respectively). A sharp improvement occurred in 2020, increasing to 0.87, indicating much stronger liquidity during that year. In 2021, the ratio decreased to 0.43, signaling a reduction in liquidity compared to the previous year but still significantly higher than the pre-2020 period.
Overall, the data indicates a period of constrained liquidity prior to 2020, followed by a significant enhancement in liquidity in 2020 likely due to increased quick assets and reduced current liabilities. However, this improved liquidity partially receded in 2021 with a notable increase in current liabilities, although quick assets remained substantially higher than in earlier years. The quick ratio movement reflects these shifts, suggesting that while the company bolstered its short-term financial stability during 2020, 2021 saw a partial relaxation of that position.
Cash Ratio
Royal Caribbean Cruises Ltd., cash ratio 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) | ||||||
| Cash and cash equivalents | 2,701,770) | 3,684,474) | 243,738) | 287,852) | 120,112) | |
| Total cash assets | 2,701,770) | 3,684,474) | 243,738) | 287,852) | 120,112) | |
| Current liabilities | 7,285,683) | 4,537,121) | 7,952,896) | 7,112,165) | 4,790,264) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.37 | 0.81 | 0.03 | 0.04 | 0.03 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Airbnb Inc. | 1.31 | 1.24 | — | — | — | |
| Booking Holdings Inc. | 1.79 | 3.23 | — | — | — | |
| Chipotle Mexican Grill Inc. | 1.23 | 1.16 | — | — | — | |
| DoorDash, Inc. | 2.13 | 3.47 | — | — | — | |
| McDonald’s Corp. | 1.17 | 0.56 | — | — | — | |
| Starbucks Corp. | 0.81 | 0.63 | 0.45 | — | — | |
| Cash Ratio, Sector | ||||||
| Consumer Services | 1.30 | 1.29 | — | — | — | |
| Cash Ratio, Industry | ||||||
| Consumer Discretionary | 0.64 | 0.59 | — | — | — | |
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 2021 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,701,770 ÷ 7,285,683 = 0.37
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending December 31, 2021.
- Total cash assets
- There is a substantial increase in total cash assets from 2017 through 2021. Starting with a relatively modest amount in 2017 of approximately 120 million US dollars, the cash assets nearly doubled by 2018 and then saw a slight decline in 2019. However, a dramatic increase occurred in 2020, with cash assets reaching over 3.6 billion US dollars, followed by a decline in 2021 to around 2.7 billion US dollars. This sharp rise in 2020 likely reflects measures taken to ensure liquidity during an uncertain financial period.
- Current liabilities
- Current liabilities follow a different pattern. They increased significantly from approximately 4.8 billion US dollars in 2017 to over 7.1 billion US dollars in 2018, continued to rise to roughly 7.95 billion US dollars in 2019, then dropped markedly to about 4.5 billion US dollars in 2020, before increasing once again to approximately 7.3 billion US dollars in 2021. This volatility suggests considerable fluctuations in short-term obligations, possibly linked to operational changes or financing activities.
- Cash ratio
- The cash ratio, reflecting liquidity by comparing cash to current liabilities, remains very low from 2017 to 2019, ranging between 0.03 and 0.04. In 2020, this ratio jumps significantly to 0.81, indicating a strong improvement in liquidity with the availability of cash to cover current liabilities. However, it declines again in 2021 to 0.37, which, while still higher than the earlier years, shows a reduction in liquidity compared to the peak in 2020.
Overall, the data points to a notable increase in liquidity during 2020, coinciding with a reduction in current liabilities, possibly reflecting strategic financial management during a challenging period. Despite some rebound in liabilities and a decrease in cash assets in 2021, liquidity remains at a relatively higher level compared to the first three years analyzed.