Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Royal Caribbean Cruises Ltd., long-term (investment) activity ratios
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).
The analysis of long-term activity ratios reveals a period of relative stability from 2017 through 2019, followed by a severe contraction in asset efficiency during 2020 and 2021. The overall trend indicates a significant decrease in the capacity to generate revenue relative to the invested capital and asset base during the latter two years of the period.
- Fixed Asset Utilization
- Net fixed asset turnover, both excluding and including operating lease right-of-use assets, remained consistent between 0.40 and 0.44 from 2017 to 2019. A sharp decline occurred in 2020, with the ratio dropping to 0.09, followed by a further decrease to 0.06 by the end of 2021, signaling a substantial reduction in the productivity of fixed assets.
- Overall Asset Efficiency
- Total asset turnover followed a trajectory nearly identical to fixed asset turnover. After fluctuating between 0.34 and 0.39 during the first three years, the ratio plummeted to 0.07 in 2020 and reached a period low of 0.05 in 2021, reflecting a systemic decline in the efficiency of the total asset base.
- Equity Efficiency
- Equity turnover showed a gradual upward trend from 0.82 in 2017 to a peak of 0.90 in 2019. Although this ratio also experienced a sharp collapse in 2020 to 0.25, a slight recovery to 0.30 was observed in 2021, indicating a marginally faster recovery in equity utilization compared to the total and fixed asset metrics.
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Net Fixed Asset Turnover
Royal Caribbean Cruises Ltd., net fixed asset turnover 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) | ||||||
| Revenues | 1,532,133) | 2,208,805) | 10,950,661) | 9,493,849) | 8,777,845) | |
| Property and equipment, net | 25,907,949) | 25,246,595) | 25,466,808) | 23,466,163) | 19,735,180) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 0.06 | 0.09 | 0.43 | 0.40 | 0.44 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Airbnb Inc. | 38.27 | — | — | — | — | |
| Booking Holdings Inc. | 13.33 | — | — | — | — | |
| Chipotle Mexican Grill Inc. | 4.27 | — | — | — | — | |
| DoorDash, Inc. | 12.16 | — | — | — | — | |
| McDonald’s Corp. | 0.94 | — | — | — | — | |
| Starbucks Corp. | 4.56 | 3.77 | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Consumer Services | 2.39 | — | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Consumer Discretionary | 3.32 | — | — | — | — | |
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
Net fixed asset turnover = Revenues ÷ Property and equipment, net
= 1,532,133 ÷ 25,907,949 = 0.06
2 Click competitor name to see calculations.
The analysis of net fixed asset turnover reveals a significant deterioration in the efficiency of long-term asset utilization between 2017 and 2021. While the ability to generate revenue relative to the asset base remained relatively stable in the early period, a sharp collapse occurred starting in 2020, indicating a critical misalignment between capital investment and revenue generation.
- Revenue Performance
- Revenues exhibited a growth trajectory from 2017 through 2019, increasing from US$ 8.78 billion to a peak of US$ 10.95 billion. This trend reversed abruptly in 2020, where revenues fell to US$ 2.21 billion, followed by a further decline to US$ 1.53 billion in 2021.
- Fixed Asset Investment
- Net property and equipment showed a consistent increase from US$ 19.74 billion in 2017 to US$ 25.47 billion in 2019. Despite the subsequent and severe contraction in revenues, the asset base remained largely stagnant and slightly increased, ending 2021 at US$ 25.91 billion. This suggests that the fixed costs and capital commitments associated with these assets remained constant despite the loss of operational activity.
- Net Fixed Asset Turnover Trends
- The net fixed asset turnover ratio remained stable between 0.40 and 0.44 from 2017 to 2019, reflecting a consistent level of asset productivity. However, the ratio plummeted to 0.09 in 2020 and reached a low of 0.06 in 2021. This precipitous decline demonstrates that the company's long-term assets became significantly underutilized, as the revenue generated per dollar of net fixed assets dropped by approximately 86% from its 2019 peak.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Royal Caribbean Cruises Ltd., net fixed asset turnover (including operating lease, right-of-use asset) 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) | ||||||
| Revenues | 1,532,133) | 2,208,805) | 10,950,661) | 9,493,849) | 8,777,845) | |
| Property and equipment, net | 25,907,949) | 25,246,595) | 25,466,808) | 23,466,163) | 19,735,180) | |
| Operating lease right-of-use assets | 542,128) | 599,985) | 687,555) | —) | —) | |
| Property and equipment, net (including operating lease, right-of-use asset) | 26,450,077) | 25,846,580) | 26,154,363) | 23,466,163) | 19,735,180) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 0.06 | 0.09 | 0.42 | 0.40 | 0.44 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Airbnb Inc. | 13.98 | — | — | — | — | |
| Booking Holdings Inc. | 8.31 | — | — | — | — | |
| Chipotle Mexican Grill Inc. | 1.54 | — | — | — | — | |
| DoorDash, Inc. | 6.62 | — | — | — | — | |
| McDonald’s Corp. | 0.61 | — | — | — | — | |
| Starbucks Corp. | 1.99 | 1.64 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Consumer Services | 1.36 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Consumer Discretionary | 2.52 | — | — | — | — | |
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
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenues ÷ Property and equipment, net (including operating lease, right-of-use asset)
= 1,532,133 ÷ 26,450,077 = 0.06
2 Click competitor name to see calculations.
The analysis of long-term investment activity reveals a period of operational stability and growth followed by a severe contraction in asset utilization efficiency.
- Revenue and Asset Growth Patterns
- From 2017 through 2019, a positive correlation was observed between revenue growth and the expansion of the fixed asset base. Revenues increased from approximately $8.78 billion to $10.95 billion, while net fixed assets, including right-of-use assets, rose from $19.74 billion to $26.15 billion. This indicates a period of strategic capacity investment intended to scale operations.
- Net Fixed Asset Turnover Trends
- The net fixed asset turnover ratio exhibited relative stability between 2017 and 2019, maintaining a range between 0.40 and 0.44. This suggests a consistent efficiency in utilizing long-term assets to generate sales during normal operating conditions. However, this efficiency collapsed starting in 2020, with the ratio dropping precipitously to 0.09, and further declining to 0.06 by the end of 2021.
- Analysis of Asset Underutilization
- The drastic decline in the turnover ratio is the result of a significant divergence between revenue generation and asset holdings. While revenues fell by approximately 86% between 2019 and 2021, the net fixed asset base remained nearly constant, ending 2021 at $26.45 billion. This pattern underscores a period of extreme asset underutilization, where the fixed costs and capital investments of the fleet remained on the balance sheet despite the near-total cessation of revenue-generating activity.
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Total Asset Turnover
Royal Caribbean Cruises Ltd., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenues | 1,532,133) | 2,208,805) | 10,950,661) | 9,493,849) | 8,777,845) | |
| Total assets | 32,258,355) | 32,465,187) | 30,320,284) | 27,698,270) | 22,296,317) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.05 | 0.07 | 0.36 | 0.34 | 0.39 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Airbnb Inc. | 0.44 | — | — | — | — | |
| Booking Holdings Inc. | 0.46 | — | — | — | — | |
| Chipotle Mexican Grill Inc. | 1.13 | — | — | — | — | |
| DoorDash, Inc. | 0.72 | — | — | — | — | |
| McDonald’s Corp. | 0.43 | — | — | — | — | |
| Starbucks Corp. | 0.93 | 0.80 | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Consumer Services | 0.60 | — | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Consumer Discretionary | 0.88 | — | — | — | — | |
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
Total asset turnover = Revenues ÷ Total assets
= 1,532,133 ÷ 32,258,355 = 0.05
2 Click competitor name to see calculations.
The analysis of the investment activity ratios reveals a significant divergence between asset accumulation and revenue generation capabilities over the five-year period ending December 31, 2021. While the asset base expanded consistently, the efficiency with which these assets were utilized to generate sales experienced a severe decline starting in 2020.
- Revenue Performance
- A positive growth trajectory was maintained from 2017 through 2019, with revenues increasing from 8.78 billion USD to a peak of 10.95 billion USD. However, a precipitous decline occurred in 2020 and 2021, with revenues falling to 2.21 billion USD and 1.53 billion USD, respectively, representing a substantial contraction in operational scale.
- Asset Base Expansion
- Total assets exhibited a steady upward trend for the majority of the period, growing from 22.30 billion USD in 2017 to a peak of 32.47 billion USD in 2020. This increase indicates continued capital investment or asset acquisition despite the subsequent collapse in revenue.
- Total Asset Turnover Efficiency
- The total asset turnover ratio remained relatively stable between 2017 and 2019, fluctuating within a narrow range of 0.34 to 0.39. This suggests a consistent relationship between asset investment and sales generation during that period. In 2020, the ratio collapsed to 0.07 and further declined to 0.05 by the end of 2021, signaling a critical reduction in asset productivity.
The data indicates a period of operational distress where the company's asset-heavy structure became a liability to efficiency. The continued maintenance of a high asset base amid plummeting revenues led to an extreme degradation of the total asset turnover ratio, reflecting an inability to utilize existing infrastructure to generate top-line growth during the final two years of the observed period.
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Equity Turnover
Royal Caribbean Cruises Ltd., equity turnover 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) | ||||||
| Revenues | 1,532,133) | 2,208,805) | 10,950,661) | 9,493,849) | 8,777,845) | |
| Shareholders’ equity | 5,085,556) | 8,760,669) | 12,163,846) | 11,105,461) | 10,702,303) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 0.30 | 0.25 | 0.90 | 0.85 | 0.82 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Airbnb Inc. | 1.25 | — | — | — | — | |
| Booking Holdings Inc. | 1.77 | — | — | — | — | |
| Chipotle Mexican Grill Inc. | 3.29 | — | — | — | — | |
| DoorDash, Inc. | 1.05 | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
| Equity Turnover, Sector | ||||||
| Consumer Services | 10.21 | — | — | — | — | |
| Equity Turnover, Industry | ||||||
| Consumer Discretionary | 3.70 | — | — | — | — | |
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
Equity turnover = Revenues ÷ Shareholders’ equity
= 1,532,133 ÷ 5,085,556 = 0.30
2 Click competitor name to see calculations.
The financial trajectory between 2017 and 2021 is characterized by a period of consistent growth followed by a severe operational contraction. From 2017 to 2019, there was a synchronized increase in both revenues and shareholders' equity, suggesting a phase of stable expansion and increasing asset utilization. However, this trend reversed sharply starting in 2020, leading to a significant erosion of the equity base and a collapse in revenue generation.
- Revenue Performance
- Revenues exhibited a positive growth trend from 2017 through 2019, peaking at 10,950,661 thousand USD. A precipitous decline occurred in 2020, where revenues fell to 2,208,805 thousand USD, with a further reduction to 1,532,133 thousand USD by the end of 2021, representing a substantial loss of top-line earning capacity.
- Shareholders' Equity Dynamics
- Equity grew steadily from 10,702,303 thousand USD in 2017 to a peak of 12,163,846 thousand USD in 2019. Subsequently, a sharp downward trend was observed, with equity falling to 8,760,669 thousand USD in 2020 and continuing to decline to 5,085,556 thousand USD in 2021, indicating a significant reduction in the company's net asset value.
- Equity Turnover Analysis
- The equity turnover ratio improved from 0.82 in 2017 to 0.90 in 2019, signaling enhanced efficiency in utilizing shareholder capital to generate sales. This efficiency collapsed in 2020, with the ratio dropping to 0.25. While the ratio showed a marginal increase to 0.30 in 2021, this was not driven by revenue recovery—as revenues continued to fall—but rather by the more rapid depletion of shareholders' equity relative to the decline in revenue.
In summary, the data reveals a transition from a high-efficiency growth phase to a period of extreme financial stress. The disparity between the 2019 peak and the 2021 lows highlights a fundamental shift in the company's ability to leverage its equity base for revenue generation.
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