Norwegian Cruise Line Holdings Ltd (NCLH)

Short-term

Turnover ratios

The activity ratios of Norwegian Cruise Line Holdings Ltd show varying trends over the past five years.

Inventory turnover has fluctuated, with a substantial increase from 2019 to 2020, followed by a decline in 2021, and an upward trend in 2022 and 2023. The company's ability to manage inventory efficiently improved in recent years, indicating better control over stock levels and potentially lower holding costs.

Receivables turnover has experienced significant fluctuations, with a sharp decrease in 2021 followed by substantial increases in 2022 and 2023. This suggests that the company collected its accounts receivable more quickly in the last two years, reflecting improved credit policies or more effective collection efforts.

Payables turnover also displayed fluctuations, with a notable increase in 2021, followed by varying levels in 2022 and 2023. The company's ability to manage its payables effectively improved in 2021, indicating potential negotiations for better payment terms with suppliers.

The working capital turnover ratio was not available for 2020 and prior years, but it was 0.78 in 2021. This suggests that the company generated $0.78 in revenue for every dollar of working capital, indicating the efficiency of utilizing working capital to support its revenue-generating activities.

Overall, improvements in inventory turnover, receivables turnover, and payables turnover ratios in recent years indicate that Norwegian Cruise Line Holdings Ltd has been more efficient in managing its assets, collecting payments from customers, and managing its payables. These trends suggest improvements in operational efficiency and financial management within the company.

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Average number of days

Days of inventory on hand (DOH) measures how many days a company holds inventory before it is sold. In the case of Norwegian Cruise Line Holdings Ltd, we observe fluctuations in this ratio over the past five years. In 2021, the DOH was notably high at 103.00 days, indicating that inventory was held for an extended period before being utilized. This could potentially lead to increased carrying costs and risks associated with obsolete inventory. Subsequently, there was a decrease in 2022 to 41.48 days, followed by a further decrease in 2023 to 34.35 days, suggesting a more efficient management of inventory in recent years.

Days of sales outstanding (DSO) reflects the average number of days it takes for a company to collect revenue after a sale is made. Norwegian Cruise Line Holdings Ltd had exceptionally high DSO in 2021 at 657.62 days, indicating significant delays in receiving payments from customers. This could potentially strain the company's cash flow and working capital management. However, there was a significant improvement in 2022 and 2023, with DSO dropping to 24.59 days and 11.96 days, respectively, suggesting a more efficient collection process.

Number of days of payables represents the average number of days a company takes to pay its suppliers. Norwegian Cruise Line Holdings Ltd had varying levels of days of payables over the past five years. In 2021, the number of days of payables was notably high at 203.18 days, indicating that the company took an extended period to settle its payables. This may have strained relationships with suppliers and could potentially affect the company's creditworthiness. The number of days of payables decreased in 2022 and 2023 to 63.80 days and 37.99 days, respectively, indicating improved payment practices.

Overall, the trend in activity ratios for Norwegian Cruise Line Holdings Ltd suggests fluctuations in inventory management, accounts receivable collection, and accounts payable practices over the years. Efforts to improve efficiency in these areas have been visible in recent years, which can positively impact the company's working capital and overall financial health.

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Long-term

The long-term activity ratios for Norwegian Cruise Line Holdings Ltd, namely the Fixed Asset Turnover and Total Asset Turnover ratios, provide insights into the company's efficiency in utilizing its long-term assets to generate sales and overall asset utilization.

Starting with the Fixed Asset Turnover ratio, we observe a fluctuating trend over the past five years. In 2023, the ratio stood at 0.52, indicating that for every dollar invested in fixed assets, the company generated $0.52 in revenue. This represents an improvement from the previous year (0.33) and suggests that Norwegian Cruise Line Holdings Ltd is becoming more effective in generating sales from its fixed assets.

On the other hand, the Total Asset Turnover ratio portrays a similar trend, albeit at a broader level considering all assets. In 2023, the ratio was 0.44, reflecting that the company generated $0.44 in revenue for each dollar of total assets. This also signifies an enhancement from the prior year (0.26) and indicates that the company is utilizing its total assets more efficiently to drive revenue.

Overall, the increasing trend in both the Fixed Asset Turnover and Total Asset Turnover ratios suggests that Norwegian Cruise Line Holdings Ltd is improving its asset utilization efficiency over the years. However, further analysis and comparison with industry benchmarks would be valuable to assess the company's performance in this aspect comprehensively.