Use the annual report of Carnival Corporation for the 2007 fiscal year to answer the following questions. This information can be found on either the annual report or the SEC 10-K filing at by following the links to Investor Relations.
(a) Does Carnival use the direct or indirect method to prepare a statement of cash flows?
(b) List the major cash inflows from each of the three activities sections for 2007.
(c) List the major cash outflows from each of the three activities sections for 2007.
(d) Compare Carnival’s net income and cash flows from operations for 2005, 2006 and 2007. Comment on the relationship each year and the change from year to year.
(e) Calculate cash flows per share for 2005, 2006, and 2007.How does cash flow pershare compare to basic earnings per share?
(f) In part (d), you compare cash flows from operations and net income. In part (e), you compare cash flows per share and earnings per share. Is one of these techniques better than another?
(g) Assume the viewpoint of a supplier, an investor, and an employee. Comment on the cash flow data from each perspective.
(h) Does Carnival raise a significant portion of money through financing activities or investing activities? List any significant inflows.
(i) Does the industry in which Carnival operates and/or the economy affect how much cash is provided or used by each business activity?
(j) Calculate all cash flow ratios that are possible using the data available.
(k) What is Carnival’s free cash flow? Did Carnival spend a significant amount of money on purchasing PP&E assets? What does that indicate from an investor’s perspective?

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