After taking a quick look at Carnival Corporation's (CCL 1.13%) financials, you would be forgiven for thinking that the company is in trouble. Indeed, it appears at first glance that Carnival is unable to cover all of its current liabilities falling due within 12 months with its current assets.

Why is this important? Well, if a company's current assets are less than its current liabilities then it may run into trouble paying back creditors in the short term. Current assets and current liabilities are defined as assets and liabilities falling due within twelve months. This part of the balance sheet usually includes things such as bank overdrafts, invoices, expenses, and cash.

Unfortunately, Carnival only has a current ratio of 0.4, which indicates that the company has only $0.40 in assets for every $1 in liabilities the company has to pay within the next twelve months.

Peers
Nonetheless, financial ratios tend to be sector specific. Effectively this means that while debt ratios, valuations, or liquidity ratios may seem odd for one company, ratios need to be compared to sector peers in order to gain a suitable comparison. For example, a debt-to-equity ratio of more than 100% may be acceptable for the worlds largest offshore oil driller, Seadrill. However, a debt-to-equity ratio of greater than 100% for a highly cash generative tech company, such as Facebook, would cause concern.

So, how does Carnival compare to its close peers? It would appear that Royal Caribbean Cruises (RCL 0.54%) and Norwegian Cruise Line Holdings (NCLH -0.21%), Carnival's closest listed rivals, also have low current liquidity. In fact, both companies have current ratios of 0.2, actually less than that of Carnival.

Looking for an explanation
Although it seems to be universal across the sector, these low levels of current liquidity are a problem. Having said that, it seems that there is quite a simple explanation for this.

While trawling through the SEC filings of the three cruise companies something becomes apparent: they are holding a lot of customer cash as deposits. While this cash would usually be considered an asset, it is in fact booked as a liability as the company in question has to return the cash to customers if required. This excerpt from Carnival's third quarter 10-Q explains the situation--in particular, the issue of the company's working capital deficit :

This deficit included $3.0 billion of current customer deposits, which represent the passenger revenues we collected within a year in advance of sailing dates and, accordingly, are substantially more like deferred revenue balances rather than actual current cash liabilities.

This goes a long way to explaining Carnival's seemingly perilous financial situation. What's more, both of Carnival's close peers use the same style of accounting. So, for the most part, current liabilities are actually, in a way, assets that don't need to be covered.

Is there a need for concern?
So are any of these three companies in real trouble?

To get a better understanding of the three companies' financial positions, we can recalculate their current ratios excluding any customer deposit liabilities. Additionally, in the case of Carnival we can recalculate the current ratio without including the short-term portion of long-term debt, as according to Morningstar the company has a credit rating of BBB, which indicates that it will have no trouble refinancing. All in all, Carnival's adjusted current ratio works out to around 0.94; not perfect, but still more robust than it was previously .

If we apply similar formulas and calculations to Royal Caribbean and Norwegian we get current ratios of 0.9 for Royal Caribbean and 0.5 for Norwegian. This is actually more concerning because it indicates that Norwegian could have a real financial problem on its hands. 

Foolish summary
Overall, at first glance the financial position of Carnival may seem perilous. However, in reality the company's short-term financial stability is fairly robust and investors need not be overly concerned. Still, Norwegian's low current ratio even after adjusting for customer deposits is worrying.