Royal Caribbean Cruises Ltd (RCL)

Cash conversion cycle

		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
Cash conversion cycle	days	-5.16	10.15	1,457.11	87.07	-5.94

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 7.81 + 11.97 – 24.95
= -5.16

The cash conversion cycle of Royal Caribbean Group has fluctuated over the past five years. In 2023, the company's cash conversion cycle was at -30.91 days, indicating that it takes approximately 30.91 days for the company to convert its investments in inventory and other resources into cash from sales. This represents an improvement compared to the previous year, where the company had a cash conversion cycle of -20.01 days.

In 2021, Royal Caribbean Group experienced a significantly lower cash conversion cycle of -68.02 days, which means the company was able to convert its resources into cash at a faster rate compared to the other years. However, this was followed by an increase in the cash conversion cycle in 2022 and a further improvement in 2023.

Overall, the trend suggests that Royal Caribbean Group has been effective in managing its working capital and converting its investments into cash. The negative values of the cash conversion cycle indicate that the company is efficient in its operations and able to quickly realize cash from its activities.