Royal Caribbean Cruises Ltd (RCL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 7.44 | 11.77 | 6.34 | 3.71 | 2.49 |
The solvency ratios of Royal Caribbean Group exhibit trends that indicate the company's ability to meet its financial obligations and manage its debt levels over the past five years.
1. Debt-to-assets ratio: The trend shows a slight increase from 0.36 in 2019 to 0.61 in 2023, indicating that 61% of the company's assets are financed by debt. This may suggest a higher reliance on debt financing to support its operations and investments in recent years.
2. Debt-to-capital ratio: The ratio increased from 0.48 in 2019 to 0.82 in 2023, implying that debt accounts for 82% of the company's capital structure. This also suggests a higher debt burden compared to equity in financing the company's operations.
3. Debt-to-equity ratio: The trend shows fluctuations, with a significant increase from 0.91 in 2019 to 4.54 in 2023. This implies that the company's debt levels are 4.54 times higher than its equity, signaling a higher financial risk for investors and creditors.
4. Financial leverage ratio: The ratio increased from 2.49 in 2019 to 7.44 in 2023, showing that the company's financial leverage has increased significantly. This ratio indicates the extent to which the company is using debt to finance its assets, with 7.44 times greater debt than equity supporting its operations.
Overall, the solvency ratios of Royal Caribbean Group suggest a rising reliance on debt financing over the years, leading to higher financial leverage and debt burden. It is essential for investors to monitor these ratios closely to assess the company's ability to manage its debt levels and maintain financial stability in the long term.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.21 | -0.56 | -3.00 | -5.45 | 5.10 |
The interest coverage ratio is a measure of a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
In the case of Royal Caribbean Group, the interest coverage ratio has fluctuated over the past five years. In 2019, the ratio was 6.06, suggesting a comfortable ability to cover interest expenses more than six times over. However, by 2020, the ratio had declined to -3.95, indicating that the company's earnings were insufficient to cover its interest expenses, posing a risk of potential financial distress.
The situation improved in 2021 and 2022, with interest coverage ratios of -3.08 and -0.53 respectively. Although these ratios were still negative, they showed a trend of moving closer to a positive coverage, indicating a partial recovery in the company's ability to meet interest obligations.
By 2023, the interest coverage ratio had improved further to 2.25, which suggests that the company's earnings were able to cover its interest expenses around 2.25 times. Although the ratio remains below ideal levels, this increase indicates a positive trajectory in the company's ability to manage its debt and interest obligations.
Overall, the fluctuating interest coverage ratios of Royal Caribbean Group reflect a period of financial volatility, with signs of improvement in recent years but still highlighting the importance of closely monitoring the company's ability to meet its financial obligations.