FORMULA 2019 2018

Acid Test Ratio 8,062.6−123.3 9,338.9−108.5

= =
4,727.4 3,383.4
Current Assets−Inventory
Current liabilities 7,939.3 9,230.4
= 4,727.4 = 3,383.4

= 1.68 : 1 = 2.73 : 1

1) LIQUIDITY

A liquidity ratio is a financial ratio that indicates whether a company's current assets will be
sufficient to meet the company's obligations when they become due.

Acid Test Ratio

The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a
company to pay its current liabilities when they come due with only quick assets. Quick
assets are current assets that can be converted to cash within 90 days or in the short-term. An
acid test ratio that is greater than 1 means that the company has enough quick assets to pay
for its current liabilities. If a firm has enough quick assets to cover its total current liabilities,
the firm will be able to pay off its obligations without having to sell off any long-term or
capital assets.

In the year 2019, it shows that every RM1 of current liability, the Genting Malaysia
Bhd has RM 1.68 of quick assets to pay for it. In the year 2018, it shows that every RM 1 of
current liability, the Genting Malaysia Bhd has RM2.73 of quick assets to pay for it. Hence,
this means that Genting Malaysia Bhd can pay off all of its current liabilities with quick
assets and still have some quick assets left over.