PriceSmart Inc (PSMT)

Days of inventory on hand (DOH)

		Aug 31, 2024	May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019
Inventory turnover		1.18	1.18	1.18	1.10	1.20	1.24	1.19	1.02	1.10	1.10	1.07	0.99	1.25	3.06	2.98	2.68	3.21	3.67	3.05	2.51
DOH	days	309.82	308.34	309.49	333.28	304.34	294.03	305.68	357.98	330.46	331.43	340.98	367.45	292.06	119.38	122.64	136.27	113.83	99.56	119.67	145.39

August 31, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 1.18
= 309.82

The days of inventory on hand (DOH) for PriceSmart Inc have fluctuated over the past few years, indicating varying efficiency in managing inventory levels.

From February 2020 to November 2020, there was a significant increase in DOH, reaching a peak of 357.98 days in November 2022. This suggests that PriceSmart had excessive inventory levels relative to its sales during this period, which may have tied up capital and potentially led to carrying costs.

Subsequently, there was a notable improvement in inventory management, as seen in the decreasing trend in DOH from August 2022 to May 2023. This downward trend continued until reaching a low of 99.56 days in August 2020. This downward trend indicates that PriceSmart was efficiently managing its inventory levels relative to its sales volumes during this period.

However, there was an upward trend in DOH from August 2020 to November 2021, which peaked at 367.45 days in November 2021. This increase may suggest potential inefficiencies in inventory management, leading to excess inventory levels relative to sales.

Overall, PriceSmart Inc's DOH has shown fluctuations, highlighting periods of both efficient and inefficient inventory management practices. It is important for the company to strive for a balance in maintaining adequate inventory levels to meet demand while avoiding excessive holding costs. Further analysis and monitoring of inventory turnover and sales trends may help in optimizing inventory management practices.