PriceSmart Inc (PSMT)

Quick ratio

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Cash	US$ in thousands	239,984	237,710	202,060	299,481	102,653
Short-term investments	US$ in thousands	91,081	11,160	50,233	46,509	17,045
Receivables	US$ in thousands	17,904	13,391	12,359	13,153	9,872
Total current liabilities	US$ in thousands	634,477	579,456	533,552	568,275	407,454
Quick ratio		0.55	0.45	0.50	0.63	0.32

August 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($239,984K + $91,081K + $17,904K) ÷ $634,477K
= 0.55

The quick ratio, also known as the acid-test ratio, is a liquidity ratio that measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing quick assets (cash, marketable securities, and accounts receivable) by current liabilities.

Analyzing the quick ratio of Pricesmart Inc. over the past five years, we observe the following trend:

- In 2023, the quick ratio is 0.63, indicating that for every dollar of current liabilities, Pricesmart has $0.63 of quick assets available to meet those obligations. This suggests a moderate ability to cover short-term liabilities with liquid assets.

- In 2022, the quick ratio was 0.53, which was lower than the previous year. This suggests a decrease in liquidity and may indicate a potential strain on the company's ability to meet short-term obligations.

- In 2021, the quick ratio increased to 0.57, showing a slight improvement in liquidity compared to the previous year but still below the 2020 level.

- 2020 had a quick ratio of 0.69, indicating a relatively strong ability to meet short-term obligations with quick assets. This suggests a healthy liquidity position.

- In 2019, the quick ratio was 0.39, which was the lowest in the observed period, indicating a relatively weak liquidity position and potential difficulty in meeting short-term liabilities with available quick assets.

Overall, the trend indicates some fluctuation in Pricesmart's liquidity over the years. While the quick ratio has improved from 2019 to 2020, it dipped in 2021 and 2022 before recovering moderately in 2023. It is important to note that a quick ratio above 1 is generally considered healthy, as it indicates that the company has more quick assets than current liabilities. Therefore, Pricesmart's recent quick ratio indicates a need for continued monitoring of its liquidity position to ensure it can effectively meet its short-term obligations.