Carnival Corporation (CCL)

Interest coverage

		Nov 30, 2024	Nov 30, 2023	Nov 30, 2022	Nov 30, 2021	Nov 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	3,574,000	2,005,000	-4,470,000	-7,921,000	-9,358,000
Interest expense	US$ in thousands	61,000	2,066,000	1,609,000	1,601,000	895,000
Interest coverage		58.59	0.97	-2.78	-4.95	-10.46

November 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $3,574,000K ÷ $61,000K
= 58.59

Based on the provided data on Carnival Corporation's interest coverage ratio, we observe a fluctuating trend over the years:

1. As of November 30, 2020, the interest coverage ratio was -10.46, indicating that Carnival Corporation's earnings were insufficient to cover its interest expenses by a significant margin. This suggests a higher financial risk due to potential difficulties in meeting debt obligations.

2. By November 30, 2021, the interest coverage ratio improved slightly to -4.95 but remained in negative territory, signaling continued challenges in generating enough earnings to cover interest payments adequately.

3. The trend continued to improve by November 30, 2022, with the interest coverage ratio increasing to -2.78. Although still negative, this shows some progress in managing interest expenses relative to earnings.

4. The significant turnaround occurred by November 30, 2023, when the interest coverage ratio reached 0.97, indicating that Carnival Corporation's earnings were just enough to cover its interest payments. While this is an improvement, it suggests a narrow margin of safety and potential vulnerability to changes in operating performance.

5. The most notable improvement was seen by November 30, 2024, with an interest coverage ratio of 58.59. This substantial increase shows Carnival Corporation's earnings vastly exceeding its interest expenses, reflecting a more financially stable position and lower risk of defaulting on debt obligations.

In conclusion, the analysis reveals a turbulent journey for Carnival Corporation's interest coverage ratio, with initially weak performance gradually strengthening to a robust level in the most recent period. Continued monitoring of this ratio is crucial to assess the company's ability to comfortably meet its interest obligations moving forward.