Nestle Company Analysis and Financial Review

The assignment involves analyzing Nestle's company overview, including its history, products, and initiatives. The analysis also covers the company's financial performance, including its revenue, profitability, and gearing ratio. Additionally, the document reviews Nestle's market position in the food and beverage industry, highlighting its competitors and market trends.

ACC 10007
Financial Information for
Decision Making
A Financial Analysis on Nestle (Malaysia) Berhad
Group Assignment (Report)
Group Name: MILO
Group Memebers:
1. Chio Kay Jean 101216578
2. Grace Lee Ying Ying 101213922
3. Kiing Kiu Yong 101216604
4. Oh Xiu Feng 101214666
5. Sarah Binti Supahan 101214284
Tutorial Group: 09, Thursday 0930-1030
Tutor: Dr. Yii Kwang Jing

Executive summary
The purpose of this report is to analyse the financial position of Nestle (Malaysia) Berhad which
determines whether Nestle is currently at a favourable financial position in the market and to the
company itself. Not only that, a company overview has been done and in short, the company’s
history dates back to the 19th century up until today and was the result of a merge between two
food and beverage companies. With that said, an industry overview was conducted and it was
found that the food and beverage industry is one of the fastest growing industries globally, with
US taking the lead as main importer back in 2017. For the analysis, four areas were analysed;
profitability, efficiency, liquidity and gearing. These are vital in determining the financial state of
Nestle. For profitability, Nestle (Malaysia) Berhad had been proven to be efficient in converting
its sale into profits. The efficiency however showed that the company may be facing a financial
distress. Nestle (Malaysia) Berhad has indicated that it has not been liquid and are possibly
unlikely to meet its current obligations. Moreover, the company operates at a normal or optimal
financial level even though there is an increase in gearing ratios. The cash flow however, the
company made a repayment of borrowings, causing a massive cash outflow in financing
activities. This report also covers other relevant information about the company in a non-
financial aspect such as nutrition, water and environment and the people. Recommendations have
also been given on how to improve the company’s financial status.
i

Table of Contents
Executive summary....................................................................................................................................i
1.0 Introduction and Purpose of Analysis................................................................................................1
2.0 Company and Industry Background..................................................................................................1
2.1 Company..........................................................................................................................................1
2.2 Industry............................................................................................................................................2
3.0 Analysis of Financial Report Data......................................................................................................3
3.1 Profitability......................................................................................................................................3
3.2 Efficiency..........................................................................................................................................5
3.3 Liquidity...........................................................................................................................................7
3.4 Gearing.............................................................................................................................................9
4.0 Cash flow analysis over the 3 years..................................................................................................11
5.0 Assessment of Other Relevant Information.....................................................................................13
5.1 Nutrition.........................................................................................................................................13
5.2 Water and Environment...............................................................................................................14
5.3 Our People......................................................................................................................................15
6.0 Conclusion..........................................................................................................................................16
Appendices.................................................................................................................................................1
Appendix A: Profitability......................................................................................................................1
Appendix B: Efficiency.........................................................................................................................3
Appendix C: Liquidity..........................................................................................................................6
Appendix D: Gearing............................................................................................................................7
Bibliography..............................................................................................................................................8
List of Figures
Figure 1: ROE and ROA of Nestle (Malaysia) Berhad from 2016 to 2018.................................................3
Figure 2: Net Profit Margin of Nestle (Malaysia) Berhad from 2016 to 2018.............................................4
Figure 3: Asset Turnover Ratio of Nestle (Malaysia) Berhad from 2016 to 2018.......................................5
Figure 4: Remaining Efficiency Ratios of Nestle (Malaysia) Berhad from 2016 to 2018............................6
Figure 5: Liquidity Chart of Nestle (Malaysia) Berhad from 2016 to 2018.................................................7
Figure 6: Gearing Ratio of Nestle (Malaysia) Berhad from 2016 to 2018...................................................9

List of Tables
Table 1: Profitability Ratios of Nestle (Malaysia) Berhad from 2016 to 2018.............................................3
Table 2: Efficiency Ratios of Nestle (Malaysia) Berhad from 2016 to 2018...............................................5
Table 3: Liquidity Ratios of Nestle (Malaysia) Berhad from 2016 to 2018.................................................7
Table 4: Gearing Ratio of Nestle (Malaysia) Berhad from 2016 to 2018....................................................9
Table 5: Net Cash Flows of Nestle (Malaysia) Berhad from 2016 to 2018...............................................11

1.0 Introduction and Purpose of Analysis
The team has been assigned to develop a report regarding the financial and non-financial
performance of Nestle (Malaysia) Berhad for both internal and external stakeholders who might
be interested in investing in the company. The purpose of this report is to prepare an analysis on
the company’s performance within a 3-year span, particularly from 2016 to 2018. To start off,
the financial aspects of the report will be based on several factors which are the profitability,
efficiency, liquidity and lastly gearing. Additionally, an analysis of Nestle (Malaysia) Berhad
Group’s non-financial aspects which are the environmental and social responsibilities have been
conducted. Furthermore, some considerations on potential outlook are made based the
company’s current financial situation and provides recommendations to improve it. The content
of this report is to assist stakeholders in their investment decision making.
2.0 Company and Industry Background
2.1 Company
Nestle is a multinational food beverage company based in Vevey, Switzerland has been
operating since 1905 after the merging of the Anglo-Swiss Milk company which was founded in
1886 by brothers George and Charles Page, and the famously known Farine Lactée Henri
Nestlé’s founder, Henri Nestle which was founded 20 years prior to Anglo-Swiss. Nestle first
started their operations back in 1912 in Penang, after the expansion of operations, it moved its
headquarters to Kuala Lumpur in 1935 (Star Media Group Berhad 2016).
According to McGrath (2018), Nestle was ranked the world’s second largest food and beverage
company. The company operations include producing around 200 brands, and their main
products are the categories of tea, coffee, bottled water, baby food, milk products, cereals,
confectionery goods and many more.
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2.2 Industry
The industry allocated for this report is the Food and Beverage Industry which is one of the
fastest-growing industries globally. It is an industry whereby it produces edible goods and
beverages through way of agriculture or processing (GlobalEdge 2019). In 2017, the USA was
leading in food and beverage exports and imports alike. Although the imports of the country
outweighed the exports, incurring a trade deficit. Additionally, the statistics such as user
penetration, revenue and many more are increasing every year. For example, the expected
revenue growth for the industry in 2019 is expected to grow by 22% in contrast to 2018 (Statista
2019).
However, there are many strong competitors who offer similar goods like Nestle products to the
market. One of the top Nestle rivals, Mondelez which produces various products like chocolate,
beverages, cookies, and confectionary (Bhasin 2018). Due to their great market dominance by
providing products that suit to particular place of customers plus the goods sold are mostly
similar to Nestle company, Mondelez is considered to be a strong competitor to Nestle. In
addition, other companies like Mars, Kraft, Lindt, Hershey’s, Kellogg and Unilever also compete
aggressively in the food and beverage industry.
2

3.0 Analysis of Financial Report Data
3.1 Profitability
2018 2017 2016
Return on equity (ROE) 102.13% 100.15% 94%
Return on assets (ROA) 32.1% 31.8% 30.8%
Net profit margin 16% 15.44% 15.14%
Table 1: Profitability Ratios of Nestle (Malaysia) Berhad from 2016 to 2018
Figure 1: ROE and ROA of Nestle (Malaysia) Berhad from 2016 to 2018
Return on equity (ROE) measures how well a company create profits from its shareholders
investments in the company. Based on the figure above, ROE of Nestle (Malaysia) Berhad in
FY2016 was 94% and increase to 100.15% in FY2017 while slightly increase in FY2018 which
was 102.15%. Generally, the ROE of Nestle was increasing steadily in these three years. It is
believed that the return on equity is outstanding due to the percentage Nestle’s return on equity
from both FY2017 and FY2018 are higher than 100%. Additionally, a slight increase of ROE
may show that the company is gaining profits from its shareholders investments in the company.
3

On the other hand, return on assets (ROA) indicates how efficient the company utilizes its
available assets to generate an income. Refer to Figure 1, ROA of Nestle increased from 30.8%
to 31.8% from FY2016 to FY2017. ROA slightly increased from FY2017 to FY2018 which was
32.1%. From this, Nestle had utilised its assets efficiently to generate earnings as the ROA is
stably increasing over the years as shown in Figure 1 from FY2016 to FY2018. Overall, Nestle
had efficiently and effectively used its assets and this helps generate a steady profit for the
company.
Figure 2: Net Profit Margin of Nestle (Malaysia) Berhad from 2016 to 2018
Next, the net profit margin measures the percentage of profit a company earned from its total
revenue. As shown in Figure 2, the net profit margin in FY2016 was 15.14% and slightly
increased to 15.44% in FY2017. A continue increase until 16% in FY2018. This shows that the
net profit margin of Nestle had steadily increased over these three years. Ultimately, the
performance of Nestle was efficient at converting its sales into profits as the higher the ratios, the
more efficient a company generates profits.
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3.2 Efficiency
2018 2017 2016
Asset turnover 2.02 times 2.06 times 3.69 times
Inventory turnover 53.8 days 50.9 days 51.8 days
Debtors turnover 40.7 days 40.7 days 42.4 days
Creditors turnover 149.6 days 147.8 days 154.1 days
Table 2: Efficiency Ratios of Nestle (Malaysia) Berhad from 2016 to 2018
Figure 3: Asset Turnover Ratio of Nestle (Malaysia) Berhad from 2016 to 2018
Nestle’s ability in generating one ringgit of sales for every ringgit of investment in assets had
relatively decreased over the three years as shown in Table 2. The asset turnover has dropped
from RM3.69 of sales for every ringgit of asset in FY2016 to 2.02 ringgit in FY2018. This
suggests inefficient management of both current and non-current assets, which are the
inventories and account receivables. This may occur due to the competitive and challenging
economic environment.
5

Figure 4: Remaining Efficiency Ratios of Nestle (Malaysia) Berhad from 2016 to 2018
Next, Nestle (Malaysia) Berhad took averagely 50.9 days in FY2017 to convert raw materials
into finished goods and sell out the inventory, which is shorter than that in FY2016 which is
51.8. However, reduced days of inventory turnover implies either insufficient inventory levels or
loss of sales of the company. After that, the inventory turnover lengthened to 53.8 days in
FY2018 from 50.9 days in FY2017. Therefore, the inventory was held by Nestle for about 53.8
days before it was sold. Longer days of inventory turnover may increase the risk of the inventory
becoming obsolete.
Furthermore, Nestle (Malaysia) Berhad had taken 42.4 days in FY2016 to collect cash from its
account receivables and managed to remain constant at 40.7 days in both FY2017 and FY2018.
If Nestle’s credit terms are of 30 days, the debtors turnover over the three years may reflect an
inefficient management of accounts receivable as all had exceeded 30 days. The longer period of
collecting money from account receivables increases the risk of Nestle developing bad and
doubtful debts. Lower debtors turnover may also cause Nestle to lose its customers when other
competitors offer longer credit terms as in 40 days.
6

Lastly, the creditors turnover of Nestle has shortened from an average of 154.1 days in FY2016
to 147.8 days in FY2017. It can be deduced that Nestle had gained satisfactory liquidity position
in FY2017 to be able to repay the account payables in a shorter period of time. Nevertheless, an
increase in accounts payable ratio from FY2017 to FY 2018 may indicate that the company had
negotiated a different payment arrangement with its suppliers or the company was facing a
financial distress.
3.3 Liquidity
2018 2017 2016
Current ratio 0.68 times 0.65 times 0.65 times
Cash flow ratio 0.59 times 0.45 times 0.59 times
Table 3: Liquidity Ratios of Nestle (Malaysia) Berhad from 2016 to 2018
Figure 5: Liquidity Chart of Nestle (Malaysia) Berhad from 2016 to 2018
7

In FY2016, Nestle has RM0.65 of current assets for every ringgit of current liabilities. This
remained constant in FY2017. Although, for a company to remain solvent, the firm must have a
current ratio of minimum 1.5x, this would ensure that the company is able to meet their current
debt obligations. In this case, Nestle has not been liquid throughout the aforementioned years but
has improved in slightly in FY2018 as it has increased by 0.03 in FY2018, making it the highest
of obtaining RM0.68 per $1 of current liabilities. Despite the improvement, the firm is still
operating at high levels of liquidity and moreover, it has a long activity cycle, which implies that
the firm is unlikely to meet its current debt obligations.
In FY2018, Nestle had RM0.59 of net operating cash flows for every ringgit current liabilities.
This may seem like positive increase compared to FY2017 with a difference of RM0.14 net
operating cash flows for every ringgit current liability. Although, after observing the timeline,
2018’s cash flow ratio is exactly the same as what FY2016 had encountered, implying that there
have been fluctuations throughout the years. With this in mind, it is possible for the firm to meet
its current obligations by using its net operating activities cash flows. Regardless, the cash flow
ratio, though more prevalent, is not a major representative of cash outflow. For example, many
companies deduct their depreciation expenses despite it not being a component of real cash
outflow, affecting the true accuracy of their cash outflow.
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3.4 Gearing
2018 2017 2016
Gearing ratio 38.57% 34.15% 29.48%
Table 4: Gearing Ratio of Nestle (Malaysia) Berhad from 2016 to 2018
Figure 6: Gearing Ratio of Nestle (Malaysia) Berhad from 2016 to 2018
Gearing ratio is capital structure ratio that measures how an entity finances its investment in
assets by comparing the entity’s debt relative to equity. In other words, gearing represents a
company’s leverage by means how much of the business funding borrowed by the company
versus the shareholders’ equity.
From the table, it can be clearly observed that the gearing ratio increased from FY2016 to
FY2018 that indicates an increase of debts exist per ringgit of equity financing. The gearing ratio
in FY2016 shows that the entity used RM 0.29 of debts per ringgit of equity, whereas in FY2017
the ratio went up to 34.15% which meant around RM 0.34 of debts were used in every one
9

ringgit of equity. As of FY2018, about RM 0.39 of debts were obtained by every one ringgit of
owner’s equity.
Overall, the company operated at a normal or optimal financial level even though there is an
increase in the gearing ratio for the three consecutive years as the ratios are in between the range
of 25% to 50% (White 2019). Additionally, increasing gearing ratio is not necessary to indicate a
bad sign of the company. As in some cases, company needs more funding in order to expand its
operations hence ultimately contribute to higher profits return. Besides, any company which is
getting new or expensive fixed assets also may incur a higher gearing ratio (Kenton 2019).
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4.0 Cash flow analysis over the 3 years
2018
RM’000
2017
RM’000
2016
RM’000
Net cash from operating activities 1,043,174 735,591 922,786
Net cash (used in)/ from investing activities (120,027) (160,709) (119,002)
Net cash used in financing activities (963,280) (436,435) (875,076)
Table 5: Net Cash Flows of Nestle (Malaysia) Berhad from 2016 to 2018
Based on the table above, it shows that the net cash from operating activities for Nestle
(Malaysia) Berhad decreased from FY2016 to FY2017 which is from RM922,786,000 to
RM735,591,000. However, there is an increment of RM307,583,000 from FY2017 to FY2018,
which was from RM735,591,000 to RM1,043,174,000 (Nestle Corporate Governance &
Financial Report 2018).
According to the Statement of Cash Flow (SOCF) in 2018, Nestle company experienced a huge
cash outflow in inventories to pay back their suppliers as compared to FY2017 which is from
RM11,979,000 to RM63,994,000 (Nestle Corporate Governance & Financial Report 2018). In
spite of that, the net cash flow from the operating activities is still higher than the profit after tax.
That means the cash flow of the company is positive and manageable in covering the costs
company spent.
Next, the net cash used in investing activities of Nestle company in FY2016 was
RM119,002,000 and increased to RM160,709,000 in 2017. One of the main reasons causing this
result is the increase in acquisition of property, plant and equipment (PPE) of Nestle company,
such as a hike of around RM41,319,000 from FY2016 to FY2017 (Nestle Corporate
Governance & Financial Report 2016). However, the net cash used in investing activities
decreased to RM120,027,000 in FY2018, this may due to the introduction of two extra proceeds
of Nestle in FY2018 which are proceeds from divestment and proceeds from disposal of
leasehold land.
11

In addition, Nestle used RM875,076,000 in financing activities in FY2016 (Nestle Corporate
Governance & Financial Report 2016), which is nearly a double of that in FY2017 at
RM436,435,000. This is because Nestle has a repayment of borrowings which was up to
RM204,325,000 in FY2016 while in contrast to FY2017, Nestle received proceeds from
borrowings about RM 277,882,000. Meanwhile in FY2018, Nestle company once again made a
repayment of borrowings, causing a cash outflow in financing activities increased to
RM963,280,000 which is the highest among the three years (Nestle Corporate Governance &
Financial Report 2018).
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5.0 Assessment of Other Relevant Information
5.1 Nutrition
Good nutrition plays an important role in leading a healthy lifestyle as people’s food selection
each day impacts their health. Nowadays, people are more health conscious and are beginning to
eat healthily to sustain a healthy lifestyle. Majority of food manufacturers, including Nestle
(Malaysia) Berhad has employed nutritionists and food scientists to monitor the nutrition value
to ensure good quality and food safety. According to the Nestle in Society (2018), the CSV key
performance data in Nestle in Society report shows that the number of products with Healthier
Choice Logo increased from zero to 59 products between 2016 to 2018.
Moreover, Nestle (Malaysia) Berhad applied the Nestle Nutritional Profiling System that based
on the dietary intake suggestions by authorities like the World Health Organisation (WHO) to its
products worldwide since 2004 (Nestle 2019). Nestle has also regularly improved and assessed
the nutrition value of its products by cutting down the sugar content or the level of salt as well as
reducing Saturated Fatty Acids (SFAs) and total fats when producing non-fat, low-fat and full
cream milk products to meet distinct nutritional requirements for many years. According to new
research published by the European Journal of Nutrition (EJON), Nestle has produced more
nutritious products effectively after applied the system successfully (Nestle 2016).
Besides, Nestle launched the global ‘Nestle for Healthier Kids’ initiative to further develop more
healthier products and assist families in raising kids healthier so that parents can provide the
proper nutrition to their children (Nestle 2018). In addition, Nestle also plans to promote better
programs and online services to offer more nutritional information, healthy recipes and feasible
tips to the families in order to lead a healthier live for 50 million children by 2030.
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5.2 Water and Environment
The mother earth is hurting and the environmental issues that are occurring around us are the
signs to the damage caused by human. Factories, one of the main culprits produce a lot of waste
every single day to the environment. From this, Nestle has taken several actions in ensuring
nature conservation and reducing pollutions and climate change. One of the effective ways is to
recycle waste. In 2018, Nestle (Malaysia) Berhad recycled 12,549 tonne waste in total, which
increased distinctly as compared to 11,270 recycled waste in 2016 (Nestle in Society 2018).
Recycling waste of factories is highly encouraged as this not only benefits environment but also
the factories. This is because they can earn some additional income by selling the recycled items
which creates a win-win situation to both.
According to the Nestle in Society Report 2018, Nestle (Malaysia) Berhad owns seven factories
in Malaysia and all of them have achieved zero waste to landfill status (Nestle in Society 2018).
Due to Nestle company has managed to reduce the emission of waste by boosting yield in their
production and also increased the recycling rate of their waste materials. Before recycling, Nestle
will segregate out all the packaging waste such as paper, plastic, glass and rejected product into
waste bins for recycle.
14

5.3 Our People
Even though Nestle is considered as the world’s largest foodstuff company and provides to
almost every country in the world, the company is claimed to be involved in child and slave
labouring when producing its chocolate supply (Bellon 2018). A lawsuit has been filed by
Massachusetts federal court claimed that the regular supplier of cocoa beans of Nestle on the
Ivory Coast is using dangerous forms of child labour including trafficking children for slave
labour. The children are trafficked from nearby countries and they are usually 12 to 15 years old
(Andrei 2017). On top of that, Nestle company does not take any actions against this practice but
continues to import cocoa beans from the supplier.
Furthermore, there are also many cases on the injuries caused by the machetes, which are used to
harvest cocoa pods are reported. According to the report and supported evidences of children
being enslaved and abused, the reputation of Nestle in the mind of the customers and society will
eventually be lowered. Some would even consider to stop buying goods that contains chocolate
ingredients from Nestle in order to halt child slavery and abuse for supplying high demand of
chocolate goods. This does not only tarnish the company’s goodwill but may also hugely impact
the sales of the company.
15

6.0 Conclusion
To conclude, Nestle (Malaysia) Berhad was performing well over the past three years. In
particular, the increasing profitability ratios indicates the group is profitable as a whole. The
efficiency ratios did not experience much of a change as well. Further, the stable liquidity ratios
showed that the group was managing its current liabilities well. The cash flow of the group has
also been normal. Nestle is likely to stay profitable even after 2018, which can be deduced from
the rising ratios of profitability from 2016 to 2018.
However, Nestle (Malaysia) Berhad is recommended to shorten its inventory turnovers to
preferably 30 days that matches the benchmark (Hargrave 2019). A high inventory turnover in
days implies either strong sales or insufficient level of inventory of Nestle (Malaysia) Berhad.
Additionally, the longer the inventory is held, the higher the holding costs will be. Finally, Nestle
is also recommended to remain its gearing ratio within 25 to 50% that is considered optimal for a
well-established company (White 2019). A high gearing ratio shows Nestle has higher
proportion of debt compared to equity. If Nestle has too much of liabilities, the company might
face bankruptcy especially if the loan have variable interest rates and a sudden jump in rates
occurs (White 2019).
(2,828 words)
16

Appendices
Appendix A: Profitability
1. Return on Equity (ROE)
Formula: Profit after Income Tax
Average total equity ×100
ROE in 2016 = $ 637,127 , 000
$ ( 647,221+708,596 ) ' 000 ÷ 2 ×100
= 93.98%
ROE in 2017 = $ 642,550 , 000
$ ( 635,894 +647,221 ) ' 000÷ 2 × 100
= 100.15%
ROE in 2018 = $ 658,882, 000
$ ( 654,333+ 635,894 ) ' 000 ÷2 ×100
= 102.13%
2. Return on Assets (ROA)
Formula: Profit before interest ∧tax
Average total assets × 100
ROA in 2016 = $ 766,494 , 000
$ ( 2,494,610+2,488,330 ) ' 000 ÷ 2 ×100
= 30.76%
ROA in 2017 = $ 812,216 , 000
$ ( 2,616,823+2,494,610 ) ' 000 ÷ 2 ×100
= 31.78%

ROA in 2018 = $ 875,890 , 000
$ ( 2,847282+2,616,823 ) ' 000 ÷ 2 ×100
= 32.06%
3. Net Profit Margin
Formula: Profit before interest ∧tax
Sales revenue × 100
Net profit margin in 2016 = $ 766,494 , 000
$ 5,063,506 , 000 × 100
= 15.14%
Net profit margin in 2017 = $ 812,216 , 000
$ 5,260,490 , 000 × 100
= 15.44%
Net profit margin in 2018 = $ 875,890 , 000
$ 5,519,045 , 000 × 100
= 15.87%

Appendix B: Efficiency
1. Asset Turnover
Formula: Sales revenue
Average total assets
Asset turnover in 2016 = $ 5,063,506 , 000
$ ( 2,494,610+2,488,330 ) ' 000 ÷ 2
= 3.69 times
Asset turnover in 2017 = $ 5,260,490 , 000
$ ( 2,616,823+2,494,610 ) ' 000 ÷ 2
= 2.06 times
Asset turnover in 2018 = $ 5,519,045 , 000
$ ( 2,847,282+2,616,823 ) ' 000 ÷ 2
= 2.02 times
2. Inventory Turnover
Formula: Average inventory
Cost of sales ×365
Inventory turnover in 2016 = $ ( 455,337+ 414,262 ) ' 000 ÷ 2
$ 3,066,051, 000 ×365
= 51.8 days
Inventory turnover in 2017 = $ ( 467,316+455,337 ) ' 000÷ 2
$ 3,309,386 , 000 × 365
= 50.9 days

Inventory turnover in 2018 = $ ( 530,378+ 467,316 ) ' 000 ÷2
$ 3,381,380 , 000 ×365
= 53.8 days
3. Debtors Turnover
Formula: Average trade debtors
Credit sales ×365
Debtors turnover in 2016 = $ ( 569,052+606,966 ) ' 000 ÷ 2
$ 5,063,506 , 000 ×365
= 42.4 days
Debtors turnover in 2017 = $ ( 605,130+569,052 ) ' 000 ÷ 2
$ 5,260,490 , 000 ×365
= 40.7 days
Debtors turnover in 2018 = $ ( 626,947+ 605,130 ) ' 000÷ 2
$ 5,519,045 , 000 × 365
= 40.7 days

4. Creditor Turnover
Formula: Average account payables
Credit purchases × 365
Creditor turnover in 2016 = $ ( 1,392,780+1,231,605 ) ' 000 ÷ 2
$ 3,107,126 , 000 ×365
= 154.1 days
Creditor turnover in 2017 = $ ( 1,296,619+1,392,780 ) ' 000 ÷ 2
$ 3,321,365 , 000 ×365
= 147.8 days
Creditor turnover in 2018 = $ ( 1,527,276+1,296,619 ) ' 000 ÷ 2
$ 3,444,442 , 000 ×365
= 149.6 days

Appendix C: Liquidity
1. Current Ratio
Formula: Current assets
Current liabilties
Current ratio in 2016 = $ 1,030,036 , 000
$ 1,576,843 , 000
= 0.65 times
Current ratio in 2017 = $ 1,073,111 , 000
$ 1,651,110 , 000
= 0.65 times
Current ratio in 2018 = $ 1,215,416 , 000
$ 1,782,079 , 000
= 0.68 times
2. Cash Flow Ratio
Formula: Net cash flow ¿ operating activities ¿
current liabities
Cash flow ratio in 2016 = $ 922,786 , 000
$ 1,576,843 , 000
= 0.59 times
Cash flow ratio in 2017 = $ 735,591 , 000
$ 1,651,110 , 000
= 0.45 times
Cash flow ratio in 2018 = $ 1,043,174 ,000
$ 1,782,079, 000

= 0.59 times
Appendix D: Gearing
1. Gearing ratio
Formula: Non−current liabilities
( Total equity +non−current liabilities ) ×100
Gearing ratio in 2016 = $ 270,546 , 000
$ ( 647,221+270,546 ) ' 000 ×100
= 29.48%
Gearing ratio in 2017 = $ 329,819 , 000
$ ( 635,894 +329,819 ) ' 000 ×100
= 34.15%
Gearing ratio in 2018 = $ 410,870 , 000
$ ( 654,333+ 410,870 ) ' 000 × 100
= 38.57%

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