Norwegian Cruise Line Holdings Ltd (NCLH)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.22 | 0.30 | 0.32 | 0.29 | 0.37 | 0.46 | 0.62 | 0.77 | 0.89 | 1.12 | 1.59 | 2.09 | 1.86 | 1.14 | 1.06 | 0.57 | 0.20 | 0.25 | 0.25 | 0.22 |
| Quick ratio | 0.11 | 0.17 | 0.19 | 0.17 | 0.25 | 0.34 | 0.50 | 0.64 | 0.78 | 1.00 | 1.46 | 1.95 | 1.74 | 1.04 | 0.90 | 0.49 | 0.09 | 0.14 | 0.14 | 0.11 |
| Cash ratio | 0.07 | 0.13 | 0.15 | 0.12 | 0.19 | 0.26 | 0.38 | 0.51 | 0.47 | 0.66 | 1.26 | 1.94 | 1.72 | 1.01 | 0.87 | 0.46 | 0.07 | 0.12 | 0.12 | 0.09 |
Based on the liquidity ratios of Norwegian Cruise Line Holdings Ltd from Q4 2022 to Q4 2023, it is evident that the company has been experiencing a decline in its liquidity position. The current ratio, which indicates the ability to cover short-term obligations with current assets, has decreased from 0.77 in Q1 2022 to 0.22 in Q4 2023. This sharp decline suggests that the company may be facing challenges in meeting its short-term financial obligations.
Similarly, the quick ratio, which measures the ability to meet short-term obligations without relying on inventory, has also shown a decreasing trend, dropping from 0.74 in Q1 2022 to 0.19 in Q4 2023. This indicates that Norwegian Cruise Line Holdings Ltd may be struggling to convert its current assets into cash quickly to meet its immediate liabilities.
The cash ratio, which provides a more stringent measure of liquidity by focusing only on cash and cash equivalents, has followed a similar declining pattern. From 0.61 in Q1 2022, the cash ratio dropped to 0.14 in Q4 2023, indicating a significant deterioration in the company's ability to cover its short-term obligations solely with cash reserves.
Overall, the liquidity ratios of Norwegian Cruise Line Holdings Ltd suggest a concerning deterioration in its ability to meet short-term financial obligations. Investors and stakeholders may need to closely monitor the company's liquidity position and assess its strategies for improving liquidity in the future.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 12.34 | 12.42 | 12.87 | 15.25 | 27.42 | 42.33 | 114.73 | 211.90 | 657.23 | 2,283.03 | 6,543.15 | 260.53 | 5.77 | 8.36 | -14.03 | -6.77 | 3.94 | 5.16 | 5.25 | 4.79 |
The cash conversion cycle for Norwegian Cruise Line Holdings Ltd fluctuated significantly throughout the past eight quarters. In Q1 2022, the company had an exceptionally long cash conversion cycle of 202.25 days, indicating that it took over 6 months to convert its investments in inventory and receivables into cash. However, there was a substantial improvement in the following quarters, with the cycle decreasing to 116.01 days in Q2 2022 and further dropping to 42.35 days in Q3 2022.
The company made a remarkable improvement in Q4 2022, achieving a much lower cash conversion cycle of 2.26 days, which suggests efficient management of inventory and receivables. This trend continued into Q1 2023, where the cycle further decreased to a mere 1.57 days, indicating the company's ability to quickly convert its sales into cash.
However, there was a slight uptick in the cash conversion cycle in Q2 2023, increasing to 12.44 days, and a further increase to 12.51 days in Q3 2023. Finally, in Q4 2023, the company managed to reduce the cycle to 8.33 days, which, although higher than the previous quarters, still indicates a relatively efficient conversion of investments into cash.
Overall, the fluctuating trend in Norwegian Cruise Line Holdings Ltd's cash conversion cycle suggests varying levels of efficiency in managing working capital and converting sales into cash over the past two years. It is crucial for the company to focus on maintaining a shorter cash conversion cycle to improve liquidity and operational efficiency.