Royal Caribbean Cruises Ltd (RCL)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.17 | 0.19 | 0.37 | 0.49 | 0.95 |
| Quick ratio | 0.04 | 0.06 | 0.23 | 0.38 | 0.83 |
| Cash ratio | 0.04 | 0.06 | 0.23 | 0.38 | 0.83 |
Royal Caribbean Cruises Ltd's liquidity ratios have shown a declining trend over the years based on the provided data.
1. Current Ratio: The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has decreased significantly from 0.95 in 2020 to 0.17 in 2024. This indicates that the company may be facing challenges in meeting its current liabilities with its current assets.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Royal Caribbean Cruises' quick ratio has also declined substantially from 0.83 in 2020 to 0.04 in 2024, suggesting a potential strain on the company's ability to meet its immediate obligations without relying on inventory.
3. Cash Ratio: The cash ratio, which focuses solely on the most liquid assets (cash and cash equivalents) in relation to current liabilities, has followed a similar downward trend, dropping from 0.83 in 2020 to 0.04 in 2024. This may indicate that the company's cash reserves may not be sufficient to cover its short-term liabilities adequately.
Overall, the decreasing trend in Royal Caribbean Cruises Ltd's liquidity ratios suggests a potential liquidity risk, as the company may be struggling to maintain sufficient liquid assets to meet its short-term financial obligations. It is crucial for the company to closely monitor its liquidity position and implement appropriate strategies to improve its liquidity position to ensure continuity of operations and financial stability.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 11.18 | 11.64 | 12.36 | 20.63 | 15.67 |
The cash conversion cycle of Royal Caribbean Cruises Ltd has shown a fluctuating trend over the past five years. In 2020, the company's cash conversion cycle was 15.67 days, which increased to 20.63 days in 2021. However, in 2022, there was a significant improvement as the cash conversion cycle decreased to 12.36 days. This trend continued in the following years, with the cycle further decreasing to 11.64 days in 2023 and reaching 11.18 days in 2024.
A lower cash conversion cycle indicates that the company is able to efficiently convert its investments in raw materials and other inputs into cash receipts from sales. This improvement in the cash conversion cycle may suggest that Royal Caribbean Cruises Ltd has been managing its working capital more effectively, possibly through better inventory management, faster collection of receivables, or extending payment terms for payables.
Overall, the decreasing trend in the cash conversion cycle for Royal Caribbean Cruises Ltd over the years reflects a positive sign of greater efficiency in the company's cash flow management and working capital performance.