Kraft Foods Group Inc. (NASDAQ:KRFT)

The current ratio exhibited fluctuating performance between 2012 and 2014. Initial values indicated a relatively stable liquidity position, but a notable decline occurred in the most recent period.

Current Ratio Trend

The current ratio began at 1.34 in 2012, increasing to 1.44 in 2013. This suggests an improvement in the company’s ability to cover short-term liabilities with short-term assets during that period. However, a significant decrease to 1.00 was observed in 2014. This represents a substantial reduction in the buffer of current assets available to meet current liabilities.

The changes in the current ratio appear to be driven by the relative movements of current assets and current liabilities. While current assets remained relatively stable, current liabilities increased considerably in 2014.

Current Assets

Current assets demonstrated modest fluctuation, starting at US$4,823 million in 2012, rising to US$4,908 million in 2013, and then decreasing slightly to US$4,791 million in 2014. This indicates a generally consistent level of short-term asset holdings.

Current Liabilities

Current liabilities decreased from US$3,606 million in 2012 to US$3,410 million in 2013. However, a substantial increase to US$4,773 million was recorded in 2014. This rise in short-term obligations is the primary factor contributing to the decline in the current ratio.

The decrease in the current ratio to 1.00 in 2014 warrants further investigation. A ratio of 1.00 indicates that the company has exactly enough current assets to cover its current liabilities, leaving no margin for unexpected events or operational challenges. This reduced liquidity position could potentially impact the company’s operational flexibility and ability to meet its short-term obligations.