PriceSmart Inc (PSMT)

Inventory turnover

		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	Aug 31, 2019	May 31, 2019
Cost of revenue (ttm)	US$ in thousands	592,389	580,323	565,367	549,414	536,255	520,062	512,959	507,649	503,446	497,434	487,041	1,029,319	1,009,612	999,539	992,443	985,307	985,230	974,260	970,560	957,595
Inventory	US$ in thousands	502,292	529,898	471,407	442,580	449,101	510,060	464,411	460,962	470,313	500,767	389,711	336,645	339,237	373,178	309,509	268,762	323,022	388,072	331,273	326,724
Inventory turnover		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	2.93	2.93

February 29, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $592,389K ÷ $502,292K
= 1.18

Inventory turnover is a key efficiency ratio that measures how many times a company's inventory is sold and replaced over a specific period. For PriceSmart Inc, the inventory turnover ratio has shown some fluctuations over the past few years.

From November 2019 to February 2020, the inventory turnover was relatively stable, hovering around 3 times, which suggested that the company was managing its inventory effectively during this period. However, from May 2020 to August 2021, the inventory turnover ratio dipped to around 1-1.25 times, indicating a slowdown in inventory turnover efficiency.

A significant increase in inventory turnover was observed from August 2021 to November 2022, with the ratio spiking to over 2.5 times and peaking at over 3 times, which could signify more effective inventory management or an increase in sales volume during this period.

Subsequently, the ratio declined to around 1-1.2 times from November 2022 to August 2023, implying a potential decrease in sales or potential inventory management challenges during this time frame.

Overall, while the inventory turnover ratio for PriceSmart Inc has fluctuated over the period analyzed, it is important for the company to monitor and manage its inventory levels efficiently to support sales and optimize profitability.