PriceSmart Inc (PSMT)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company manages its assets and resources to generate sales and cash flow. Let's analyze the activity ratios of PriceSmart Inc based on the provided data:

1. Inventory Turnover: PriceSmart Inc's inventory turnover fluctuated over the periods, ranging from 0.99 to 3.67 times. A higher inventory turnover ratio indicates that the company is selling its inventory quickly, which is generally positive as it reduces the risk of obsolescence and carrying costs. However, fluctuating turnover ratios may suggest variability in demand or inventory management challenges.

2. Receivables Turnover: PriceSmart Inc's receivables turnover varied significantly, showing a range of 221.01 to 335.38 times. A higher receivables turnover ratio implies that the company is collecting its receivables quickly, which is favorable for cash flow management. The fluctuations in receivables turnover may indicate changes in sales terms, credit policies, or customer payment behavior.

3. Payables Turnover: The payables turnover for PriceSmart Inc ranged from 1.08 to 3.53 times. A higher payables turnover ratio suggests that the company is efficiently managing its accounts payable by paying suppliers quickly. This can help in maintaining good relationships with vendors and potentially taking advantage of early payment discounts.

4. Working Capital Turnover: PriceSmart Inc's working capital turnover fluctuated between 16.55 and 38.18 times. A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales. The variations in this ratio may reflect changes in the company's operating cycle efficiency and capital management practices.

Overall, an analysis of PriceSmart Inc's activity ratios suggests mixed efficiency in managing its inventory, receivables, payables, and working capital. Monitoring these ratios over time can provide valuable insights into the company's operational performance and efficiency in asset utilization.

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Average number of days

Days of Inventory on Hand (DOH) for PriceSmart Inc have been fluctuating over the past few quarters, ranging from a high of 367.45 days to a low of 99.56 days. The overall trend shows that the company tends to keep inventory on hand for an extended period, which could indicate inefficiencies in managing inventory levels or slow-moving inventory.

Days of Sales Outstanding (DSO) have also varied, with a range between 1.20 days to 1.65 days. This indicates that the company collects its accounts receivable relatively quickly, which is favorable as it shows efficient management of credit sales and cash flow.

The Number of Days of Payables for PriceSmart Inc has shown fluctuations as well, with a range from 104.14 days to 338.30 days. The company seems to take longer to pay its suppliers in some quarters compared to others, which could impact supplier relationships or indicate cash flow challenges.

In summary, PriceSmart Inc's activity ratios suggest that the company may need to focus on optimizing its inventory management to reduce holding costs, maintain efficient receivables collection practices, and possibly improve payment terms with suppliers for better cash flow management.

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Long-term

PriceSmart Inc's fixed asset turnover ratio has been relatively stable over the past few years, ranging from 4.68 to 5.47, with the latest value at 5.02 as of February 29, 2024. This indicates that PriceSmart generates $5.02 in sales for every dollar invested in fixed assets.

On the other hand, the total asset turnover ratio has shown some variability, with values fluctuating between 2.01 and 2.54. As of February 29, 2024, the total asset turnover ratio stands at 2.28, suggesting that PriceSmart generates $2.28 in sales for every dollar of total assets.

Both ratios reveal that PriceSmart efficiently utilizes its assets to generate sales, with the fixed asset turnover showing a higher level of efficiency compared to the total asset turnover. This suggests that PriceSmart may be effectively managing its fixed assets to generate revenue.