Royal Caribbean Cruises Ltd (RCL)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	46.72	42.83	35.71	55.96	54.78
Receivables turnover	30.48	13.91	0.25	3.65	34.55
Payables turnover	14.63	14.83	9.83	18.80	15.75
Working capital turnover	—	—	—	—	—

The activity ratios of Royal Caribbean Group provide insights into how efficiently the company is managing its assets and liabilities.

1. Inventory Turnover:
- The inventory turnover ratio has fluctuated over the years, indicating variability in how quickly the company sells its inventory.
- In 2023, the ratio of 19.27 reflects an improvement compared to previous years, suggesting that Royal Caribbean Group is selling its inventory at a faster rate.
- A high inventory turnover ratio indicates effective inventory management and potentially lower carrying costs.

2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently the company collects its outstanding receivables.
- The significant increase in 2023 to 34.32 suggests an improvement in collecting payments from customers, which is a positive sign.
- A high receivables turnover ratio indicates effective credit management and timely collection of receivables.

3. Payables Turnover:
- The payables turnover ratio has shown variability over the years, which may indicate changes in the company's payment practices with suppliers.
- In 2023, the ratio of 6.03 reflects a moderate increase compared to the previous year, indicating that Royal Caribbean Group is paying its suppliers more frequently.
- A higher payables turnover ratio may indicate better liquidity management but could also suggest strained relationships with suppliers.

4. Working Capital Turnover:
- The absence of data for the working capital turnover ratio for all years may indicate that this specific ratio is not calculated for Royal Caribbean Group or is not publicly disclosed.
- The working capital turnover ratio typically measures how efficiently a company utilizes its working capital to generate sales.
- Without this ratio, it is challenging to assess how effectively the company is using its working capital in relation to its sales.

Overall, the activity ratios suggest that Royal Caribbean Group has made improvements in managing its inventories and collecting payments from customers. However, fluctuations in payables turnover and the lack of working capital turnover data may require further analysis to understand the company's overall efficiency and effectiveness in managing its resources.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	7.81	8.52	10.22	6.52	6.66
Days of sales outstanding (DSO)	days	11.97	26.24	1,484.04	99.96	10.57
Number of days of payables	days	24.95	24.61	37.15	19.42	23.17

Activity ratios provide insights into how efficiently a company manages its assets and working capital. Let's analyze the activity ratios of Royal Caribbean Group based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH decreased from 22.22 days in 2022 to 18.94 days in 2023, indicating an improvement in managing inventory levels.
- In 2021, the DOH spiked to 62.72 days, suggesting a potential issue with inventory management.
- The significant decrease in DOH in 2020 compared to 2021 signifies a more efficient inventory turnover in that year.
- The DOH was relatively stable in 2019 at 16.54 days.

2. Days of Sales Outstanding (DSO):
- The DSO dropped from 21.93 days in 2022 to 10.63 days in 2023, reflecting a faster collection of receivables.
- In 2021, the DSO rose sharply to 97.21 days, indicating a slower collection of sales.
- The DSO decreased significantly in 2020 compared to 2021, showing improved receivables management.
- The DSO was relatively steady in 2019 at 10.19 days.

3. Number of Days of Payables:
- The number of days of payables decreased from 64.16 days in 2022 to 60.49 days in 2023, suggesting the company is taking more time to pay its suppliers.
- In 2021, the days of payables were high at 227.95 days, indicating slower payment to suppliers.
- The days of payables decreased noticeably in 2020 compared to 2021, showcasing a more efficient payable management.
- The number of days of payables was relatively stable in 2019 at 57.51 days.

In summary, Royal Caribbean Group has shown improvements in managing inventory, collecting receivables faster, and optimizing payables. These trends indicate increased efficiency in utilizing working capital and assets over the years.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	0.41	0.27	0.00	0.04	0.41
Total asset turnover	0.35	0.22	0.00	0.03	0.35

Royal Caribbean Group's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, demonstrate the efficiency with which the company utilizes its assets to generate revenue.

From 2019 to 2023, the fixed asset turnover ratio fluctuated significantly, indicating varying levels of efficiency in generating revenue from fixed assets. In 2023, the ratio improved to 0.46, signifying that each dollar invested in fixed assets generated $0.46 in revenue. This increase suggests better utilization of fixed assets during the period.

Similarly, the total asset turnover ratio also experienced fluctuations over the same period. The ratio increased to 0.40 in 2023, indicating that every dollar of total assets generated $0.40 in revenue. This improvement suggests enhanced efficiency in asset utilization to generate revenue.

Overall, the upward trends in both fixed asset turnover and total asset turnover ratios from 2022 to 2023 signify improved efficiency in asset utilization and revenue generation for Royal Caribbean Group, reflecting positively on the company's operational performance and management of its long-term assets.