CCL — Carnival Corp.

Will it survive?

• Can it pay its interest? 2.2×
  Adequate
  Operating income $4.5B ÷ interest expense $2.1B

  Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.

• How heavy is the debt? 5.9×
  Heavy
  Total debt $26.6B ÷ operating income $4.5B

  Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.

• How long is cash tied up? —
  Not enough data

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 12%
  Solid
  NOPAT $4.5B ÷ invested capital $37.0B (debt + equity − cash)

  The rate the business earns on the money tied up in it — Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high — pair this with Owner Earnings.

• Owner Earnings (free cash) margin 10%
  Solid
  Owner Earnings $2.6B = operating cash $6.2B − capex $3.6B

  What an owner could take out without starving the business. That's 10% of revenue. Treating stock comp as the real expense it is (less $98M of SBC) leaves $2.5B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).

• Are earnings backed by cash? 2.25×
  Cash-backed
  Cash from ops $6.2B ÷ net income $2.8B

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy — growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 0%
  Reinvests most of it
  Dividends + buybacks $0 ÷ Owner Earnings $2.6B

  Of $2.6B Owner Earnings, $0 (0%) went back to shareholders — $0 dividends, $0 buybacks. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway — or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 1.29×
  Expanding
  Capex $3.6B ÷ depreciation $2.8B

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth — or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency — or a melting asset base). The ratio won't tell you which; the filings will.

Durability — 2019–2025

A moat is high return that doesn’t fade. Here are the quality metrics across a full cycle — judge the consistency, not the latest dot.

• Return on invested capital ≥15% in 0 of 7 years
  12%
• Operating margin
  17%
• Owner Earnings margin
  10%