Carnival Cruise Line Case Study

Abstract
This case study reviews the financial position of Carnival Cruise Line. The data reviewed is primarily from the previous five years of annual reports produced by the company (2007-2011) and certain key ratios derived from those reports. For comparison purposes, this case study will use Carnival Cruise Lines nearest rival, Royal Caribbean Cruise Line. This case study will prove the financial strength and stability of this company and give the reader some indication as to why Carnival Cruise Line is the industry leader in the cruise market.

Carnival Cruise Line Case Study
The company that would eventually become Carnival Cruise Line (Carnival) began in 1972. It started with just one second-hand ship and enough fuel to make a one-way trip from Miami to San Juan, Puerto Rico (Carnival Web Site). Today, Carnival is the largest cruise company in the world – consisting of ten cruise brands operating 99 ships worldwide. For the fiscal year ended November 30, 2011, Carnival served over 9.5 million passengers and generated approximately $16 billion in revenues. Based on 2011 numbers, Carnival controls 49.2% of the market while its nearest competitor – Royal Caribbean – controls 23.8%. Various smaller competitors comprise the remaining market share of 27% (Cruise Market Watch, 2012). Carnival has managed to maintain its profitability and market share in an environment of economical and geopolitical swings.
The structure of this case study will review six distinct areas: profitability, growth, cash flow, financial health, stock data and current issues facing the company. To gain perspective, the results for Carnival will be compared (where appropriate) to those of their chief rival – Royal Caribbean.
When financial analysts look at a company for possible investment, the profitability of the company plays a vital