Financial Analysis of the Carnival Corp&PLC CCL, NYS 3655 NW 87th Avenue Miam, Florida XXXXXXXXXX XXXXXXXXXX Na’Dae Beaty BUSN 5200 Webster University October 27, 2020 PART 1, COMPANY OVERVIEW: a....

Financial Analysis of the Carnival Corp&PLC
CCL, NYS
3655 NW 87th Avenue
Miam, Florida 33178-2428
(305) 599-2600
Na’Dae Beaty
BUSN 5200
Webster University
October 27, 2020
PART 1, COMPANY OVERVIEW:
a. Brief description of the company
(one paragraph,
iefly summarizing the company’s business)
     Carnival Corp (CC) and Princess Cruise Lines (PLC) is renowned as the world’s largest leisure cruise line. CC&PLC cruise line
ands include the following: Carnival Cruise line, Princess Cruises, Holland American Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK) & Cunard. CC&PLC has maintained notoriety and financial success by providing quality experiences to customers of multiple backgrounds, cultures, and languages. In 2019, CC&PLC earned an adjusted gross income of $3M dollars, which was the highest earning that the company had earned 4 years straight. CC came into to existence in 1993 to distinguish the corporation from the predecessor company, Carnival Cruise Lines. In 2003, CC and PLC combined, making the business first global cruise line operator.
. Company history (origin, major developments, etc.)
In 1972, Ted Arison, started the flagship company, Carnival Cruise Lines (CCL), with one ship called Mardi Gras. By 1974 CCL had amassed $5M in debt and the future of the company was bleak. Nonetheless, Arison seen value in the struggling company and
ought complete ownership of CCL with $1 and assume all debt associated with the business. In obtaining complete ownership Arison was able to make changes such as new partnerships with independent travel agents and advertising to the younger travelers. Arison’s determination and new vision for the company paid off and as a result the company was able to overcome financial adversity and blossom.
c. Organization (describe how the company is structured)
CC&PLC utilizes the line organizational structure. Each department is assigned a department head which has control over the specific department.
d. Main products and services (describe what the company sells; how it makes money)
CC&PLC is a vacation cruise business that offers various options for cruise destinations and one of a kind experiences on and off the cruise ship.
e. Geographic area of operations (describe where the company sells its products)
CC&PLC global headquarters is stationed in Miami, Florida but the company has several regional headquarters worldwide.
f. Recent developments (list recent major news stories, if any)
CC&PLC has been a trailblazer for the cruise industry. CC&PLC is the only business stock that is dually listed on the New York exchange and London Stock Exchange. Furthermore, CC&PLC is the only group globally that has been included in both the S&P 500 and the FTSE 500 indices.
PART 2, FINANCIAL OVERVIEW: Use the most recent 5 years data
COMMENTS:
CCL sales have increased by 33% from 2015 to 2019, furthermore, net income increased by nearly 70% between 2015 and 2019. While the company’s sale and net income growth has been positive at first glance the company’s net income has struggled to maintain positive growth. In 2019 CCL earned $20.825 mil in sales, the highest the company had earned since 2015. However, the company suffered a -5.14% decline in net income. CCL has noted that the decrease in net income for 2019 was due to unforeseen events that caused CCL to cancel a number of cruises and shortened the booking windows which negatively impacted CCL’s net income.
.
COMMENTS: In 2019 over half of Carnival Corp's expense consisted on Cost of Goods sold, which is normal for cruise/vacation companies. A cross analysis was completed between Carnival Corp, Norwegian Cruise Lines, and Lindblad Expeditions Holdings Inc and research showed very high expenses for COGS in all companies.The remaining 15.5% iis comprised of SG& A expenses, Interest, and Income tax, which is expected for cruise/vacation companies such as Carnival Corp.
c.
COMMENTS: Carnival Corp's assets are primarily made of equipment which is required to provide services to customers. The large allotment of assetts to net plant and equipment is expected because of the large fleet of ships the company has and the amount of customers they serve annually.
c.
COMMENTS: Carnival Corp's finances over half its assets with equity, which appears to be normal when cross analyzed with other companies in the same field.Carnival Corp's accounts payable is 2% of the company's overall capital structure which can demonstrate that debt is being satisfyed in a timely manner. The company's long-term debt is fair being that it is most likely made from bonds, leases, pensions/post-retirement benefits, or contingent financial obligations of the company.
PART 3, RATIO ANALYSIS: Use the most recent 2 years
(1)
    Liquidity
    
    
    
    
    
    FY 2018
    FY 2019
    Cu
ent Ratio
    
    
    
    
    Carnival Corp
    0.24
    0.23
    
    MGM Resorts International and Subsidiaries
    1.26
    0.86
    Quick Ratio
    
    
    
    
    Carnival Corp
    0.145588874
    0.105401556
    
    MGM Resorts International and Subsidiaries
    0.740608814
    0.921946417
Comments:
The liquidity ratio determines the liquid condition of the entity for meeting the short term liabilities of the entity. The cu
ent ratio of the Carnival corp is below the standard as it is less than one in both the years which states that the entity is not having sufficient cu
ent asset to tackle the short term obligations of the entity. On the other hand the MGM Resorts is having the good cu
ent ratio which states that the entity is having sufficient cu
ent asset to tackle the short term obligations of the entity. In addition to this the quick ratio determines the condition for entity for meeting the short term obligations from the liquid asset of the entity. The quick ratio of the Carnival corp is below the standard as it is less than one in both the years which states that the entity is not having sufficient liquid asset to tackle the short term obligations of the entity. On the other hand the MGM Resorts is also not having the good liquid ratio which states that the entity is not having sufficient liquid asset to tackle the short term obligations of the entity
(2)
    Asset Management
    
    
    
    
    
    FY 2018
    FY 2019
    Total Asset Turnove
    
    
    
    
    Carnival Corp
    0.445296102 times
    0.462182076 times
    
    MGM Resorts International and Subsidiaries
    0.389368458
    0.380786883
    Average Collection Period
    
    
    
    
    Carnival Corp
    6.920713945
    7.781992797
    
    MGM Resorts International and Subsidiaries
    20.39260667
    17.3370071
Comments on the Company’s Asset Management:
The asset turnover ratio of the entity determines the efficiency of the entity for generating the revenue from the assets of the entity. The asset turnover of the entity has slightly increased in the cu
ent year for the Carnival Corp which state that the entity has efficiently utilized its asset in the cu
ent year for generating the revenue. The asset turnover ratio of MGM Resort remains the same in both the years but it is less than the Carnival Corp which means that the entity is not efficient as the other entity. In addition to this the average collection of Carnival Corp is less than the MGM Resort which means that the former entity can easily collects its dues from the customers whereas the latter entity took time for the collection of the receivables.
(3)
    Debt Management
    
    
    
    
    
    FY 2018
    FY 2019
    Total Debt to Total Assets
    
    
    
    
    Carnival Corp
    42%
    44%
    
    MGM Resorts International and Subsidiaries
    50%
    46%
    
    
    
    
    Times Interest Earned
    
    
    
    
    Carnival Corp
    16.53092784
    14.85436893
    
    MGM Resorts International and Subsidiaries
    0.8239055
    3.357256242
    Comments On The Company’s Debt Management:
The debt management plays an important role for the entity and it shows the composition of the debt of the entity. The debt composition of the entity is good as compared to its competitor and the asset of the entity is more than the debt of the entity which state that the entity is less risky as compared to its industry. In addition to this the times interest earned states that the entity can easily cover its interest expenses from its earnings before interest and taxes and the condition of the entity is better than its competitor.
(4)
    Profitability
    
    
    
    
    
    FY 2018
    FY 2019
    Net Profit Margin
    
    
    
    
    Carnival Corp
    17%
    14%
    
    MGM Resorts International and Subsidiaries
    5%
    17%
    Return on Assets
    
    
    
    
    
    Carnival Corp
    7%
    7%
    
    MGM Resorts International and Subsidiaries
    2%
    6%
        Return on Equity
    
    
    
    
    Carnival Corp
    13%
    12%
    
    MGM Resorts International and Subsidiaries
    4%
    16%
Equity Multiplie
    
    
    
    PY 2018
    
    
    PY 2019
    
    Carnival Corp
    1.73
    1.74
    1.78
    1.78
    MGM Resorts International and Subsidiaries
    2.89
    2.89
    2.68
    2.68
Comments On The Company’s Profitability:
The profitability of the entity is quite good but it has declined from the previous year and it is less than the industry standard. The return on asset ratio of the entity is constant over the year and it is above the industry average which state that the performance of the entity is good. In addition to this the return on equity of the entity has slightly declined and it is less than the industry average which means that the entity is not generating sufficient revenue from the equity. Moreover the equity multiplier is also less than the industry average and the high equity multiplier state that the entity is using the high amount of debt for financing the debt. In other words the entity is not relying on the debt for financing the debt.
(5)
    Market Value Ratios
    
    
    
    
    
    FY 2018
    FY 2019
    PE Ratio
        
    
    
    
    Carnival Corp
    11.10
    11.77
    
    MGM Resorts International and Subsidiaries
    7.49
    11.10
    Market to Book Ratio
    
    
    
    
    
    Carnival Corp
    1.40
    1.37
    
    MGM Resorts International and Subsidiaries
    1.89
    2.76
PART 4, CONCLUSIONS AND RECOMMENDATIONS
Thus from the detailed analysis of the entity it is evident that the sales of the entity have increased by 33% from 2015 to 2019, furthermore, net income increased by nearly 70% between 2015 and 2019. However, the company suffered a -5.14% decline in net income. CCL has noted that the decrease in net income for 2019 was due to unforeseen events that caused CCL to cancel a number of cruises and shortened the booking windows which negatively impacted CCL’s net income. Furthermore the cu
ent ratio of the CCL is below the standard as it is less than one in both the years which states that the entity is not having sufficient cu
ent asset to tackle the short term obligations of the entity. The quick ratio of the CCL is below the standard as it is less than one in both the years which states that the entity is not having sufficient liquid asset to tackle the short term obligations of the entity. On addition to this the efficiency of the entity is good for the management of the asset and the debt composition of the entity is also favorable. Furthermore the profitability condition is good but declined in the cu
ent due to unavoidable circumstances.
Recommendations:
From the detailed analysis it is recommended that the entity should focus more on increasing the sales of the entity through various sales strategy and sales promotion strategy. Further the entity should focus on the liquid and solvency condition of the entity by paying off some of its short term obligations so as to maintain good liquidity ratio. The management should focus on increasing the efficiency of the asset for the creation of revenue for the entity.
* End of report Outline *
Carnival Corp, Expense Distriution, PY 2019
Commission, transportation, other    Onboard and other    Payroll and related    Fuel    Food    Other ship operating    Tour     &     Other     Selling and administration    Depreciation and amortization    Income Tax    Interest Expense    2720000000    2101000000    2249000000    1562000000    1083000000    2925000000    268000000    2480000000    2160000000    71000000    206000000    
Carnival Corp Asset Distribution, Dec 2019
Cash     Trade and other receivables    Inventory    Prepaid Expenses     &     other    Property and Equipment    Goodwill    Other Intangibles    Other Assets    518000000    444000000    427000000    671000000    38131000000    2912000000    1174000000    783000000    
Carnival Corp
Capital Structure, PY 2019
Accounts Payable    Short Term Debt    Cu
ent Portion of LTD    Accrued Liabilities     &     Other    Customer Deposits    Long Term Debt    Other Long Term Liabilities    Shareholder Equity    756000000    231000000    1596000000    1809000000    4735000000    9675000000    890000000    25365000000    
Carnival Corp Sales and Income Record
Sales    
2015    2016    2017    2018    2019    15714000000    16389000000    17510000000    18881000000    20825000000    Net Income    
2015    2016    2017    2018    2019    1757000000    2779000000    2606000000    3152000000    2990000000    
Sheet1
    BUSN 5200 Homework
    Week 4
        Na'Dae Beaty
    Carnival Corp , Sales and Income Record
    Year    Sales    Net Income    Sales Growth    Net Income Growth
    2015    $15,714,000,000    $1,757,000,000
    2016    $16,389,000,000    $2,779,000,000    4.3%    58.2%
    2017    $17,510,000,000    $2,606,000,000    6.8%    -6.2%
    2018    $18,881,000,000    $3,152,000,000    7.8%    21.0%
    2019    $20,825,000,000    $2,990,000,000    10.30%    -5.14%
        Avg:        7%    17%
    Carnival Corp , Expense Distribution
        Commission, transportation, other    $2,720,000,000.00    15.26%
        Onboard and other    $2,101,000,000.00    11.79%
        Payroll and related    $2,249,000,000.00    12.62%
        Fuel    $1,562,000,000.00    8.76%
        Food    $1,083,000,000.00    6.08%
        Other ship operating    $2,925,000,000.00    16.41%
        Tour & Other     $268,000,000.00    1.50%
        Selling and administration    $2,480,000,000.00    13.91%
        Depreciation and amortization    $2,160,000,000.00    12.12%
        Income Tax    $71,000,000.00    0.40%
        Interest Expense    $206,000,000.00    1.16%
        Total    $17,825,000,000.00    100.00%
        Tax rate:
            income tax    $71,000,000
            before-tax income    $3,060,000,000
            rate    2%
    Carnival Corp, Asset Distribution
        Cash     $ 518,000,000.00    1.15%
        Trade and other receivables    $ 444,000,000.00    0.99%
        Inventory    $ 427,000,000.00    0.95%
        Prepaid Expenses & other    $ 671,000,000.00    1.49%
        Property and Equipment    $ 38,131,000,000.00    84.62%
        Goodwill    $ 2,912,000,000.00    6.46%
        Other Intangibles    $ 1,174,000,000.00    2.61%
        Other Assets    $ 783,000,000.00    1.74%
        Total    $ 45,060,000,000.00    100.00%
    Carnival Corp, Capital Structure
        Accounts Payable    $ 756,000,000.00    1.68%
        Short Term Debt    $ 231,000,000.00    0.51%
        Cu
ent Portion of LTD    $ 1,596,000,000.00    3.54%
        Accrued Liabilities & Other    $ 1,809,000,000.00    4.01%
        Customer Deposits    $ 4,735,000,000.00    10.51%
        Long Term Debt    $ 9,675,000,000.00    21.47%
        Other Long Term Liabilities    $ 890,000,000.00    1.98%
        Shareholder Equity    $ 25,365,000,000.00    56.30%
        Total    $ 45,057,000,000.00    100.00%
        Liquidity        FY 2018    FY 2019
        Cu
ent Ratio
            Carnival Corp    0.24    0.23    Cu
ent Ratio for CCL showed that the company would not be able to maintain financial stability should all debts and liabilities be due at this time. This is would be of concern for investors when CCL is compared to MGM. MGM's cu
ent ratios for this period showed that the company was more than able to satisfy financial agreemtns if they were due at this time, however, the company's ratio decreased 0.4 which can be attributed to accumulated debt from investments.
            MGM Resorts International and Subsidiaries    1.26    0.86
        Quick Ratio        FY 2018    FY 2019
            Carnival Corp    0.1455888744    0.1054015558    Both CCL and MGM struggled with maintaining enough liquid assets to cover liabilities. Howver, MGM's QR was significantly higher than CCLs and ha started aa positive trend within the time period of comparison. In comparison, CCL's QR had begun to decline. While a low QR may cause alarm for investor it should be noted that a QR below 1 seems to be common in this industry.
            MGM Resorts International and...