Liquidity Ratios 2015 2014 2013

Current Ratio 0.67 0.68 0.87

Quick Ratio 0.39 0.40 -0.35
Liquidity Ratios

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated as a
company's Total Current Assets divides by its Total Current Liabilities. Nestle Malaysia Bhd's current ratio for
the quarter that ended in 0.67

Nestle Malaysia Bhd has a current ratio of 0.67 in 2015 and 0.68 in 2014 and 0.87 in
2013. It indicates that the company may have difficulty meeting its current
obligations. Low values, however, do not indicate a critical problem. If Nestle
Malaysia Bhd has good long-term prospects, it may be able to borrow against those
prospects to meet current obligations.

The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into
cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into
liquidity problems because they are unable to alleviate their obligations. Because business operations differ in each
industry, it is always more useful to compare companies within the same industry. Acceptable current ratios vary from
industry to industry and are generally between 1 and 3 for healthy businesses. The higher the current ratio, the more
capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay
off its obligations if they came due at that point. While this shows the company is not in good financial health, it does
not necessarily mean that it will go bankrupt - as there are many ways to access financing - but it is definitely not a
good sign. If all other things were equal, a creditor, who is expecting to be paid in the next 12 months, would consider
a high current ratio to be better than a low current ratio, because a high current ratio means that the company is more
likely to meet its liabilities which fall due in the next 12 months.
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. It is
calculated as a company's Total Current Assets excludes Inventory divides by its Total Current Liabilities. Nestle
Malaysia Bhd's quick ratio in year 2015 is 0.39, 0.40 in year 2014 and -0.35 in year 2013.
It indicates that the company cannot currently fully pay back its current liabilities.The quick ratio is more conservative
than the current ratio because it excludes inventories from current assets. The ratio derives its name presumably from
the fact that assets such as cash and marketable securities are quick sources of cash. Inventories generally take time
to be converted into cash, and if they have to be sold quickly, the company may have to accept a lower price than
book value of these inventories. As a result, they are justifiably excluded from assets that are ready sources of
immediate cash.In general, low or decreasing quick ratios generally suggest that a company is over-leveraged,
struggling to maintain or grow sales, paying bills too quickly or collecting receivables too slowly. On the other hand, a
high or increasing quick ratio generally indicates that a company is experiencing solid top-line growth, quickly
converting receivables into cash, and easily able to cover its financial obligations. Such companies often have faster
inventory turnover and cash conversion cycles.The higher the quick ratio, the better the company's liquidity position.