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Carnival Corporation - Case Study Example

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This paper “Carnival Corporation” presents an analytical report on the cash flow situation of the Company and on the advisability in the stocks of the Company based on ratio analysis. Carnival Corporation is one of the largest cruise companies having a portfolio of widely recognized cruise brands…
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Carnival Corporation
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Download file to see previous pages However, there has been a decline in the overall cash inflow during the year 2008. This is due to the increase in the total operating cost. The operating cost for the year 2008 was 61.71%, whereas for the year 2007 the operating cost was maintained at 58.52%. The increased fuel cost has resulted in an increase in operating expenses. The fuel cost was 14.36% of the total operating expenses for the year 2007, but the fuel cost increased to 19.62% of the operating expenses for the year 2008 resulting in higher operating expenses for the period. From the cash and cash equivalents at the end of the year 2007 of $ 943 million, the net cash and cash equivalents at the end of the year 2008 have come down by 31.07% to $ 650 million. Therefore, despite the increase in the total revenues the operating income remained at the same level for the year 2008, as compared to the year 2007. This is evident from the operating margin of 18.63% for 2008 which is lower than 20.90% for the year 2007. The 2.3% difference in the total revenue has made a large difference in dollar terms on the net cash inflow from the operating activities. The following graph indicates the relative changes in the net cash and cash equivalents for the three years.
The net cash inflows and outflows from the operating, investing and financing activities are exhibited in the following graph. The lesser cash flow from the operating activities can be cited as the main reason for this decline during 2008. While the cash flow from the operating activities was $ 4,069 million for the year 2007, the cash flow for the year 2008 from operating activities was lower at $ 3,391 million which accounts for almost a 20% reduction in the cash flow.   ...Download file to see next pagesRead More
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