PriceSmart Inc (PSMT)

Cash ratio

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Cash and cash equivalents	US$ in thousands	125,364	239,984	237,710	202,060	299,481
Short-term investments	US$ in thousands	100,165	91,081	11,160	50,233	46,509
Total current liabilities	US$ in thousands	680,148	634,477	579,456	533,552	568,275
Cash ratio		0.33	0.52	0.43	0.47	0.61

August 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($125,364K + $100,165K) ÷ $680,148K
= 0.33

The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates that a company has more cash available to meet its short-term obligations.

Analyzing PriceSmart Inc's cash ratio from August 31, 2020, to August 31, 2024, we observe a decreasing trend in the ratio over the period. The cash ratio decreased from 0.61 in 2020 to 0.33 in 2024. This decline may indicate that PriceSmart Inc has less liquid assets relative to its short-term liabilities in recent years.

The decreasing trend in the cash ratio could suggest potential liquidity challenges for PriceSmart Inc, as the company may have a lower ability to meet its short-term financial obligations using its current cash and cash equivalents. It may be important for the company to closely monitor its liquidity position and potentially explore ways to improve its cash reserves to ensure it can meet its financial obligations in the future.

Overall, based on the trend in PriceSmart Inc's cash ratio, further analysis and monitoring of the company's liquidity position are recommended to assess its ability to withstand any potential short-term financial strains.