PriceSmart Inc (PSMT)

Return on total capital

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	220,944	180,176	166,003	154,142	123,498
Long-term debt	US$ in thousands	94,443	119,487	103,556	110,110	112,610
Total stockholders’ equity	US$ in thousands	1,122,960	1,107,040	991,073	915,345	831,719
Return on total capital		18.15%	14.69%	15.17%	15.03%	13.08%

August 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $220,944K ÷ ($94,443K + $1,122,960K)
= 18.15%

PriceSmart Inc has shown a consistent improvement in its return on total capital over the past five years, with the ratio increasing from 13.08% in 2020 to 18.15% in 2024. This indicates that the company has been effectively utilizing its total capital to generate profits for its business activities. The upward trend in the return on total capital suggests efficient management of both debt and equity financing, resulting in higher returns for the company's investors. PriceSmart Inc's ability to maintain and enhance its return on total capital over the years reflects its strong operational performance and strategic financial management.