PriceSmart Inc (PSMT)

Current ratio

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Total current assets	US$ in thousands	877,107	773,579	697,204	699,002	491,896
Total current liabilities	US$ in thousands	634,477	579,456	533,552	568,275	407,454
Current ratio		1.38	1.34	1.31	1.23	1.21

August 31, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $877,107K ÷ $634,477K
= 1.38

The current ratio measures a company's ability to meet its short-term obligations with its current assets. A higher current ratio indicates a stronger ability to cover short-term liabilities.

Looking at Pricesmart Inc.'s current ratio from 2019 to 2023, we observe a consistent upward trend. The current ratio increased from 1.21 in 2019 to 1.38 in 2023, reflecting an improvement in the company's short-term liquidity position over the years. This indicates that Pricesmart Inc. has enhanced its ability to cover its short-term obligations with its current assets.

A current ratio above 1 suggests that the company has more current assets than current liabilities, which is generally considered a positive sign. Pricesmart Inc.'s current ratio has consistently remained above 1 over the years, indicating that it has more than enough current assets to meet its short-term liabilities.

This trend suggests that Pricesmart Inc. has been effectively managing its current assets and liabilities, ensuring that it has the necessary resources to cover its immediate financial obligations. It also implies that the company may have improved efficiency in managing its inventory, receivables, and payables, leading to a healthier liquidity position.

Overall, the increasing trend in Pricesmart Inc.'s current ratio reflects a strengthening short-term financial position and may indicate improved financial management and operational efficiency over the years.