PriceSmart Inc (PSMT)

Liquidity ratios

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
Current ratio 1.22 1.18 1.20 1.25 1.38 1.44 1.43 1.40 1.34 1.30 1.32 1.32 1.31 1.32 1.29 1.27 1.23 1.23 1.25 1.22
Quick ratio 0.36 0.35 0.40 0.40 0.55 0.60 0.57 0.48 0.45 0.42 0.39 0.39 0.50 0.56 0.55 0.53 0.63 0.63 0.41 0.31
Cash ratio 0.33 0.33 0.37 0.37 0.52 0.57 0.54 0.45 0.43 0.39 0.37 0.36 0.47 0.53 0.52 0.50 0.61 0.61 0.39 0.29

PriceSmart Inc's current ratio has shown a fluctuating trend over the past five years, ranging from a low of 1.18 to a high of 1.44. The current ratio indicates the company's ability to cover its short-term liabilities with its current assets. Generally, a current ratio above 1 is considered healthy, as it suggests the company has more current assets than current liabilities.

The quick ratio, which excludes inventory from current assets, has also fluctuated over the years, ranging from 0.31 to 0.63. This ratio provides a more conservative measure of liquidity, as it assumes that inventory may not be easily converted into cash.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has similarly shown variability over the years, ranging from 0.29 to 0.61. A higher cash ratio indicates a greater ability to cover short-term obligations solely with cash.

Overall, PriceSmart Inc's liquidity ratios suggest a generally healthy liquidity position, with the current ratio consistently above 1 and the cash ratio also showing a positive trend. However, the lower quick ratios in some periods indicate a potential weakness in the company's ability to quickly cover its short-term obligations, especially without relying on inventory.

Additional liquidity measure

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
Cash conversion cycle days 26.44 16.44 -1.39 6.04 13.22 18.13 30.35 46.21 41.05 49.82 66.35 30.67 1.94 -0.28 2.50 -2.35 -21.97 -4.09 16.73 23.44

The cash conversion cycle provides insight into how efficiently PriceSmart Inc is managing its working capital. A positive cash conversion cycle means the company's cash is tied up in operations before being converted back into cash, while a negative cycle indicates that the company is collecting cash from customers before paying its suppliers.

PriceSmart Inc's cash conversion cycle has fluctuated over the past few periods, ranging from -21.97 days to 66.35 days. A negative cash conversion cycle implies efficient cash management, as the company is collecting cash from customers before paying its suppliers. Conversely, a longer cash conversion cycle may indicate inefficiencies in working capital management.

The company experienced a significant improvement in its cash conversion cycle from May 2024 to Feb 2024, where it decreased from 16.44 days to -1.39 days. This negative cycle suggests that the company is able to collect cash from customers before paying its suppliers, which can be beneficial for cash flow management.

However, the cash conversion cycle increased in the subsequent periods, indicating potential challenges in working capital management. The fluctuation in the cash conversion cycle should be further analyzed to understand the underlying reasons driving these changes and to identify potential areas for improvement in managing working capital.