Statement of financial position

[@TheFinanceStoryteller]

The Airbus statement of financial position featured in this video is dated December 31st, 2019. Have a look at the financial health of Airbus based on the very latest quarterly balance sheet information, by using the Financial Health analysis of Airbus on the Simply Wall Street site: bit.ly/3fmAaqR

[@zoeybella234]

Thank you for making these short lessons, very helpful and highly appreciated.

[@TheFinanceStoryteller]

Glad you like them, Zoey! Hope you find lots more videos on the channel that are helpful for you. Please subscribe and spread the word!

[@JackMajor]

Very thorough explanation of accounting terms, this will help a bunch in reading 10-K and Qs - thank you! I can hear you are Dutch! :) Hi from Zaandam!

[@TheFinanceStoryteller]

You're welcome, Jack! I have done similar walk-throughs of income statement and cash flow statement of companies like Alphabet Inc (Google), Microsoft, Tesla, Walmart, etc. See the "finance case studies" playlist: kzbin.info/www/bejne/hnqciWiPl8qelac Groeten terug uit Zeeland! :-)

[@konstancyja82]

Amazing analysis... you learn so much in the forest of numbers!

[@TheFinanceStoryteller]

Thank you! Let's see what the next balance sheet of Airbus looks like (end of Q1)....

[@sadzy2556]

Currently busy with financial accounting hmw... Nd this popped up Thank you for this

[@TheFinanceStoryteller]

Hello Sadiqah! You're welcome. Happy to help!

[@chenghelen3729]

so nice even I have learned accounting. To explain the basic definition ursine simple and clear language, it is so helpful.

[@TheFinanceStoryteller]

Thank you very much! It's wonderful to hear that.

[@chenghelen3729]

@@TheFinanceStoryteller Sorry for my spelling:):) the "ursine" is "using", hope everyone can understand my sentence. I am preparing the Canadian CPA right now. It is my appreciation to subscribe to your channel.

[@TheFinanceStoryteller]

No worries! I understood. Hope you find a lot of useful material on my channel, I try to cover a broad range of topics. Browse through the video tab or the playlists to see what's available. Wishing you lots of success with studying.

[@Umeshmecconda]

Hello, Sir, I've been following your videos since long back. I want to settle my career in finance. I want to know which part or field of the finance will be booming in upcoming years(equity analysis, risk management) many more. I hence I urge you to help me with the question so that I planning accordingly.

[@TheFinanceStoryteller]

Thank you for the kind words, Mecconda! I have no specific advice for you, other than encouraging you to find a job that you enjoy doing, that matches your skills, and that pays well. Maybe the following video on different aspects of accounting and finance roles helps to see the full picture: kzbin.info/www/bejne/fmfNimitp9udg5Y

[@GhostShahid]

Im using this for my presentation on thursday thanks g

[@TheFinanceStoryteller]

Best of luck!

[@frandong3564]

thank you 你是个好老师

[@TheFinanceStoryteller]

You're welcome! Thank you for watching and commenting.

[@muhammadayaanubaid6865]

Nice vid very helpful

[@TheFinanceStoryteller]

Thank you, Muhammad! Much appreciated.

[@john8909]

Hey I know this isn’t related but I would greatly appreciate your help. RCL has Deferred revenues of $3billion but their cash and receivables only make up $500 million. Isn’t the accounting entry a debit to cash/receivables and credit deferred revenues? How is it possible that the deferred revenues are larger than their cash and receivables???

[@TheFinanceStoryteller]

I agree with your accounting entry. I assume you are now looking at the balance sheet at a specific point in time.... probably, they have spent some of the cash they received to pay suppliers, pay employees, pay down loans, etc. See also my video on deferred revenue kzbin.info/www/bejne/iX_KpoyvgNekgpY

[@TheFinanceStoryteller]

Hello John! I have now downloaded the RCL annual report as well, and see the numbers you are referring to. $3.4B of customer deposits liability on the balance sheet, and in note 4 Revenues the comment [START OF QUOTATION] "ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We consider customer deposits to be a contract liability once the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund. Customer deposits as of December 31, 2019 included contract liabilities of $1.7 billion". [END OF QUOTATION] So that would lead me to believe that half of the $3.4B are non-cancelable reservations (from the side of the customer), and half is not (that second half might be easier for a customer to reclaim? we would need to read the specific terms and conditions in cruise bookings!). I do not know what the RCL policy (or their contractual "position") is on customers asking their money back. From what I have heard of airlines (anecdotal evidence), they offer customers to reschedule their flight within the next six months, or to receive the equivalent of the ticket price paid in frequent flyer points that can be used at a later stage, i.e. not paying back in cash straight away. In assessing liquidity, the first thing I look at is the current ratio (current assets over current liabilities), which for RCL is only 0.15, one of the lowest I have ever seen (and I read a lot of annual reports). Basically, for every $1 that is due within a year, they have only 15 cents of cash and other assets that are expected to be converted to cash within a year. Very low even in stable economic times. Great in terms of working capital management (during stable times), but very risky when there is economic turbulence as the liquidity buffer is low. For a discussion of current ratio, see kzbin.info/www/bejne/mpzMhIqFZ7SMntE If you look at the cash flow statement, RCL paid $603MM in dividends in 2019. Per the dividend history tab on their investor website, $0.78 dividend per share was declared on February 20, 2020, and is (supposed to be) payable on April 6th. Personally, it would surprise me if they pay this (but I have no information confirming or denying it). Besides reviewing the annual report, I would also encourage you to stay on top of press releases, such as: MIAMI, March 10, 2020 /PRNewswire/ -- Royal Caribbean Cruises Ltd (NYSE: RCL) today announced that due to the spread and recent developments related to the COVID-19 outbreak, the company has increased its revolving credit capacity by $550 million bolstering the company's liquidity. The company is pursuing additional actions to improve its liquidity by reducing capital expenditures, operating expenses and taking other actions to improve liquidity by at least a further $1.7 billion in 2020. The company is also planning reductions to the 2021 capital expenditures and operating expenses. MIAMI, March 23, 2020 /PRNewswire/ -- Royal Caribbean Cruises Ltd (NYSE: RCL) today announced that it has entered into a $2.2 billion 364-day secured term loan facility, further enhancing the company's liquidity position. The facility can be extended at the company's option for an additional 364 days. The company has borrowed the full amount available under the term loan to further bolster its liquidity. Including this new financing, the company has over $3.6 billion of liquidity comprised of cash deposits and its existing undrawn revolving credit facilities (net of outstanding commercial paper). In addition, the company has committed financing for all of its new ships on order.

[@john8909]

The Finance Storyteller DUDE THANK YOU so much!!!!!! Oh wow u answered my question perfectly, I now see half of them are non cancelable and thanks for the airline insight, that could possibly be the case for cruise lines too. I should of done more research in the annual report! And ya I’m aware of the liquidity ratios and WC, as I have also come across your videos on them!!!! In order for negative WC to be good use you must keep the cycle going or else your gonna have no cash to pay the liabilities. And ya I have factored in the loans they have taken out. The revolving facility and term loan. I can’t believe you went out of your way to do this research for a comment. Your are a real one. Thank you so much!!!!!!!!!!!

[@TheFinanceStoryteller]

You're welcome, John! In many cases, I can't resist the challenge of solving a good puzzle. ;-) Actually, I plan to deliver webinars on KZbin (members-only section, see the JOIN button) in April on Q1 earnings releases to see what the impact is of the current crisis on Q1 numbers. Hope you will join!

[@rinreborn7364]

thankssssss

[@TheFinanceStoryteller]

You're welcommmmmmmmmmme!

[@ShahrukhKhan-kl8vo]

interesting video.. (Y)

[@TheFinanceStoryteller]

I agree! ;-) Very important to understand how the statement of financial position works.

[@monlivreetmoi]

Dieu merci

[@TheFinanceStoryteller]

De rien!!! 🙂

[@alial-ansari8815]

First like 🌚

[@TheFinanceStoryteller]

Very well done! Enjoy the video!

[@alial-ansari8815]

I really enjoy your videos , it’s very beneficial to me and helpful , I just have one request

[@alial-ansari8815]

Can you make a video on how to understand accounting/finance topics , I am an accounting major student , and sometimes I find a difficulty in understanding some concepts , is there a way of method to understand it ?

[@TheFinanceStoryteller]

Hello Ali! Probably the best way to understand these is to go through my playlist with videos "finance for MBA students" kzbin.info/aero/PLKbmcnUUQMllH1zwPPXQ2iqfyk_ZYbYVU or if you want to start right with the fundamental concepts then my playlist on accounting equation, double entry accounting, trial balance, etc. kzbin.info/www/bejne/pF7PdJdpib90bq8 At some point in your studies, you will probably also come across suspense accounts: kzbin.info/www/bejne/bZCmc6COmK94aLs Hope these help!

[@alial-ansari8815]

The Finance Storyteller Thanks for the Advice , for sure I will go through it 👌🏻

[@antoniotsedik16]

Current Ratio is 1.055 not 0.9

[@TheFinanceStoryteller]

Hello Anton! I believe the information in my video is correct. Current Assets 56,7. Current liabilities 62,4. Current Ratio = CA/CL = 57,7 / 62,4 = 0,9.

[@antoniotsedik16]

My bad. Counted all assets to all liabilities

[@AvatarRedbull]

sws Nederlander

[@TheFinanceStoryteller]

Jazeker!