Functional Currency and Financial Statements
It should be noted that US$ is used as the functional currency for RCL's financial statements for the following reasons:
* The company's revenue is US$-linked. Freight rates are quoted in US$ while freight revenues are collected in the US$ equivalent amounts of port of loading currencies (Thai baht, Singapore dollar, Malaysian ringit, Philippines peso, Australian dollar etc.)
* Assets (vessel) are bought and sold in US$
* 80% of the group's loan is in US$
* only part of costs is in US$
For these reasons, since 1997 RCL has been distributing our management consolidated financial statements in US$, which were re computed and prepared by Ernst & Young from the company's audited consolidated financial statements in Thai baht to our bankers, bond holders and research departments of leading securities houses with aim to provide accurate understandings of our financial conditions reflecting through the application of US$ as our functional currency.
To this day, all banks and bond holders have accepted and agreed to use US$ management accounts in computing two important financial covenants, i.e., Debt to Equity ratio and Interest Coverage