Contemporary Corporate Reporting - Carnival Corporation - Case Study Example

Contemporary Corporate Reporting of the of the The Table of Contents Part A 3 Introduction 3 Mission, Vision, Objectives and Strategies 4 Competitor Analysis 5 Financial Analysis 5 Profitability Analysis 6 Liquidity Analysis 7 Efficiency Analysis 8 Investment Ratio Analysis 9 Financial Ratio Analysis 10 Analysis of Cash Flow Ratio 11 Part B 11 Corporate Communication 11 Methods of Corporate Communication 12 Co-orientation Theory of Corporate Communication 13 Conclusion and Recommendation 14 References 15 Appendices 17 Appendix 1 17 Appendix 2 18 Appendix 3 19 Appendix 4 20 Appendix 5 20 Part A Introduction Carnival Corporation and Plc is an international cruise company as well as one of the widespread holiday companies in the world. Their range of cruise brands involves Holland American line, Carnival Cruise Lines, AIDA cruises, Princess Cruises, Costa Cruises, Ibero Cruises, P & O Cruises, and Ocean Village in Australia, Europe, Germany, North America, and United Kingdom. These brands provide a broad range of vacation and holiday products to the customer base that is widely diverse in terms of leisure-time, languages, and culture preferences. Their lines of vacation companies draw 10 million visitors annually (Carnival, 2013). The common stock of Carnival Corporation is traded on NYSE (New York Stock Exchange). The current share price of the company is $44.80 USD (Businessweek, 2014). It serves passengers of the United Kingdom through various brands which are already mentioned (Hoovers, 2014). The main purpose of this report is to do financial and competitor analysis in order to present the financial performance of Carnival Corporation and Plc. On the basis of the performance it will be advised to the client whether to make an investment of $500,000 in this company. Mission, Vision, Objectives and Strategies The mission of Carnival Corporation and Plc is to deliver extraordinary experience to the people through the best known cruise brands of the world that supply to various geographic regions, at an extraordinary cost unrivalled at sea or on land. Their vision is to offer everybody a healthy and safe place to work, live, as well as to have fun. The most crucial objective is to stay as the innovator and leader in this industry. The ultimate goal is to enhance the profit margins. They believe in offering a safe and secure work environment (Carnival, 2014a). Their customers are the youngsters to senior guests. Carnival Corporation and Plc adopts wide differentiation strategy. It offers vacation package to the customers through well recognised brands of cruise (Zhou, 2010). Competitor Analysis The main rationale of doing competitor analysis is to present a complete picture of weaknesses and strengths of potential competitors (Youngman, 1998). This will help the company to identify future strategies and plans of their competitors and to find out the match among its own capabilities and the rival’s strategy (Bensoussan & Fleisher, 2012). The competitor of Carnival Corporation and Plc is the Royal Caribbean Cruises Ltd. which operates in cruise holiday industry worldwide. It also owns various brands such as Royal Caribbean, Pullmantur, Celebrity Cruises, and Azamara Club Cruises. Their mission is to deliver outstanding vacation experience to the customers (Royal Caribbean, 2013). The current share price of Royal Caribbean Cruises Ltd. is $80.94 (Bloomberg, 2014). The reputation of Royal Caribbean is hurt because of the incident which took place last year where several people on the cruise suffered from food poisoning. This led to dwindling customer confidence and therefore an advantage for Carnival Corporation to attract more customers by providing healthy food. Financial Analysis Financial analysis is carried out to know the financial position and performance of Carnival Corporation & Plc. in comparison to its previous years and also to its competitor. The recent year taken is 2013. Profitability Analysis Figure 1: N.P & O.P of Carnival Figure 2: Both Companies for 2013 (Source: Authors creation) (Source: Authors creation) Net profit Analysis: The net profit ratio of Carnival Corporation & Plc has decreased in relation to its previous year i.e. from 8.44% to 6.97% and also in comparison to 2009 i.e. 13.30% (Figure 1). It indicates the higher risk for this company. However, its ratio is more than Royal Caribbean Cruises Ltd which is 5.95% for 2013. Therefore it is less risky company than Royal Caribbean. Operating Profit Analysis: This ratio has also decreased in comparison to 2009 as well as previous year. It was 16% in 2009, decreased to 10.67% in 2012, and further to 8.75% in 2013. For the year 2013, it is also less than Royal Caribbean (10.03%), which indicates that Carnival will not be able to utilize total amount of cash to pay off its creditors (Figure 2). Liquidity Analysis Figure 3: Current & Liquid ratio of Carnival Figure 4: Both Companies for 2013 (Source: Authors creation) (Source: Authors creation) Current Ratio: It was 0.31 in 2009 which has decreased to 0.25 in 2012, but then slightly increased to 0.29 in 2013 which is also more than Royal Caribbean which is 0.22 for the year 2013 (Figure 4). It signifies that Carnival will not face any difficulties in paying off its obligations and will also have an altitude of cover from its current assets. Liquid Ratio: It was 0.24 in 2009, which has reduced to 0.19 in 2012, but again it is observed that it is near to the ratio in 2009 i.e. 0.23 for the year 2013 (Figure 3). Royal Caribbean is having a liquid ratio of 0.19 in 2013 which is less that Carnival. Therefore a high ratio of Carnival as compared to all its previous years as well as its competitor indicates that it is meeting its short term monetary liabilities in an efficient way. Efficiency Analysis Figure 5: Asset T.R Figure 6: Debtor T.R (Source: Authors creation) (Source: Authors creation) Asset Turnover Ratio: This ratio of Carnival is same for both the year i.e. 2012 and 2013 which comes at 0.39 and is also more than 2009 which was 0.37 (Figure 5). However, it is slightly less than Royal Caribbean which is 0.40. It signifies that Carnival needs to make use of its assets more efficiently in order to generate more revenue. Figure 7: Asset & Debtor T.R of Carnival and Royal Plc (Source: Authors creation) Debtor Turnover Ratio: This ratio of Carnival has increased compared to 2009 i.e. from 34.96 to 45.80 (Figure 6) and is also more than Royal Caribbean which is 29.42. However, the Carnival’s ratio is slightly less than its previous year. The greater ratio of Carnival than its competitor shows that they are efficiently managing their debtor (Figure 7). Investment Ratio Analysis Figure 8: EPS of Carnival Figure 9: P/E Ratio of Carnival (Source: Authors creation) (Source: Authors creation) Earnings per Share (EPS): The EPS of Carnival has decreased in comparison to 2009 as well as 2012 (Figure 8). It is also less than Royal Caribbean which is 2.16 and that of Carnival is 1.39 for 2013. It signifies the lower earnings of Carnival. Price to Earnings (P/E) Ratio: This ratio has increased from 2009 and 2012 and is currently 32.23 (Figure 9). Royal Caribbean is having a ratio of 37.47 for 2013 which is more than Carnival. The increased ratio of Carnival in comparison to previous years facilitates that investors can buy the share of this company. Financial Ratio Analysis Figure 10: Gearing & D/E Ratio of Carnival Figure 11: Both Companies for 2013 (Source: Authors creation) (Source: Authors creation) Gearing Ratio: The ratio of Carnival has decreased in comparison to 2009 (Figure 10) and is also less than Royal Caribbean which indicates that it is less disposed towards the downturns and can also be considered as a good company in terms of investment (Figure 11). Debt to Equity Ratio: Carnival is having lower ratio of 0.33 in relation to Royal Caribbean ratio of 0.74. Moreover it has also decreased in comparison to 2009 which was 0.41. The lower ratio of Carnival signifies the greater security and protection to its capital. Analysis of Cash Flow Ratio Figure 12: C.F.I & O.C.F ratio of Carnival Figure 13: Both Companies for 2013 (Source: Authors creation) (Source: Authors creation) Cash Flow Indicator Ratio: It is 0.18 for both the companies but the ratio of Carnival has decreased in comparison to 2009 as well as 2012. The decreased ratio of Carnival relative to previous year signifies that it will have little difficulty in turning its sales into the cash. Operating Cash Flow Ratio: This ratio of Carnival has decreased from 2009 i.e. from 0.67 to 0.42 but it is more than 2012 which was 0.41. Carnival is also having a greater ratio than Royal Caribbean which was 0.33 for 2013. It shows that the current position of Carnival is up to the mark as well as it is doing good in terms of covering its liabilities through its operating cash flows. Part B Corporate Communication Corporate communication is regarded as an organization function which offers a vocabulary as well as framework for the effectual harmonization of all methods of interactions with the general purpose of maintaining and establishing good reputations with the groups of stakeholders upon which the company is dependent. The corporate communication mainly focuses on marketing communication, public relation, management communication, as well as other types of the organizational communication (Argenti, 2009). The main idea behind the corporate communication is to transfer the information of the company to various target groups, sometimes in the structure of a third party between the organization and its customers. Reputation and identity are the key notions within the theories of corporate communication. Identity is associated with the corporate identity which means the verbal or visual identity which is formed by the organization. If the identity of the company matches with the image as imagined by the target customers, a strong status in the nous of an indefinable asset emerges (Hubner, 2007). Methods of Corporate Communication Offering reward to customers: Reward programs and customer loyalty works well with travel and cruise businesses. Carnival Corporation and Plc communicate with vast range of customers by offering the holiday package. In this way, if customers spend some amount while travelling, then they also get reward in terms of the holiday package (Carnival 2014a). Holding special events: Other method of corporate communication is sponsoring special event by the companies to interact with unique business and customers. Carnival Corporation and Plc holds special events by choosing the unique venue in order to communicate with the target groups who are interested in planning their vacation with the company. Building interaction: In order to maintain customer relationship, companies make use of special tools to interact with customers. Carnival Corporation and Plc make use of their websites by displaying various vacation destinations as well as guarantying a satisfied vacation. Moreover, they also publish e-newsletters and provide blogs as well as receive feedback from the customers via social networking site (Carnival, 2014b). Enhancing customer service: Offering good services and products to the customers is an excellent way of corporate communication. Carnival Corporation and Plc, provides excellent and healthy food to the customers on the cruise and therefore enhance their customer service. Moreover, they guarantee the satisfaction of the customers or they promise to refund their money back and get them back home, at no cost (Carnival, 2014b). Co-orientation Theory of Corporate Communication Co-orientation theory assists in explaining what makes the communication productive. According to this theory, organizations and people relate to each other successfully. It demonstrates the method two parties are related to the similar idea. The communicators may have same perceptive of one another communication rules but sometimes perceive that they does not have similar understanding (J. Grunig & L. Grunig, 1989). Both companies i.e. Carnival Corporation and Plc and Royal Caribbean Cruises Ltd, are the international cruise company and their communication rules are almost same. They offer reward to the customers who travel on their cruise and also sponsor special events to interact with the customers or with the business groups. They also built two-way interaction with their customers with the help of social media facilities. However, in terms of enhanced customer service, Carnival Corporation and Plc offers good services and products as compared to Royal Caribbean Cruises Ltd. As discussed earlier, several people on the Royal Caribbean cruise suffered from food poisoning but this has not yet happened with Carnival Corporation and Plc. So, each of the organizations perceive that other regards the similar rules, although the communication rules of Carnival Corporation and Plc is better than Royal Caribbean Cruises Ltd. Conclusion and Recommendation The report aims to provide the overview of Carnival Corporation and Plc in terms of its products, services, mission, goals, and its competitor. In order to know the financial performance of Carnival Corporation and Plc, analysis of various ratios has been carried out. In order to make an investment in the company investigation of revenue, profitability, liquidity, cash flow, and gearing ratio analysis is very important. The liquidity position of Carnival Corporation and Plc is good as both the liquidity ratios have increased in comparison to the previous year. The asset turnover ratio as well as debtor turnover ratio has increased in comparison to 2009 but the later one is slightly less as comparison to 2012. Both the financial ratios have decreased as compared to 2009. So, it is recommended to the client that he can invest in Carnival Corporation and Plc because of its good liquidity position. Moreover, the company is making use of its assets more efficiently in order to generate more revenue. The price to earnings ratio has continuously increased since five years and the share price has also increased from the last two years. The lower debt of Carnival signifies the greater security and protection to its capital. Therefore, it will be a good decision to make an investment in Carnival Corporation and Plc. References Argenti, P.A. (2009). Corporate communications. New York: McGraw Hill Publication. Bensoussan, B.E., & Fleisher, C.S. (2012). Analysis without paralysis: 12 Tools to Make Better Strategic Decisions. New Jersey: FT Press. Bloomberg. (2014). Royal caribbean cruises ltd. Retrieved from http://www.bloomberg.com/quote/RCL:US. Businessweek. (2014). Carnival corp (CCL : New York). Retrieved from http://investing.businessweek.com/research/stocks/charts/charts.asp?ticker=CCL. Carnival. (2013). Carnival corp. annual reports. Retrieved from http://www.annualreports.com/Company/2892. Carnival. (2014a). Occupational health & safety policy. Retrieved from http://www.carnival.com/cms/fun/occupation-health.aspx?icid=CC_Footer_109. Carnival. (2014b). Carnival. Retrieved from http://www.carnival.com/. Grunig, J.E., & Grunig, L.A. (1989). Public relations research annual. New Jersey: Psychology Press. Hoovers. (2014). Carnival plc competition. Retrieved from http://www.hoovers.com/company-information/cs/competition.CARNIVAL_PLC.09b378b9022d7436.html. Hubner, H. (2007). The communication company: towards an aternative theory of corporate communication. New York: Springer Science and Business Media. Royal Caribbean. (2013). Royal caribbean cruises ltd. annual reports. Retrieved from http://annualreports.com/Company/1249. Youngman, I. (1998). Competitor analysis in financial services. England: Woodhead Publishing Limited. Zhou, Y. (2010). Carnival corporation & plc. Retrieved from http://scholarsarchive.jwu.edu/cgi/viewcontent.cgi?article=1003&context=mba_student. Appendices Appendix 1 Consolidated income statement of Carnival Corporation & Plc 2013 2012 2011 2010 2009 (Source: Carnival corp. annual reports) Appendix 2 Consolidated balance sheet of Carnival Corporation & Plc (Source: Carnival corp. annual reports) Appendix 3 Cash flow statement of Carnival Corporation & Plc (Source: Carnival corp. annual reports) Appendix 4 Share price of Carnival Corporation & Plc (Source: Businessweek, 2014) Appendix 5 Share price of Royal Caribbean Cruises Ltd. (Source: Bloomberg, 2014) Read More