PriceSmart Inc (PSMT)

Return on total capital

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	180,176	166,003	154,142	123,498	114,690
Long-term debt	US$ in thousands	119,487	103,556	110,110	112,610	63,711
Total stockholders’ equity	US$ in thousands	1,107,040	991,073	915,345	831,719	797,351
Return on total capital		14.69%	15.17%	15.03%	13.08%	13.32%

August 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $180,176K ÷ ($119,487K + $1,107,040K)
= 14.69%

The return on total capital for Pricesmart Inc. has shown a positive trend over the past five years. In 2023, the return on total capital reached 16.39%, indicating an increase compared to the previous year. This suggests the company's ability to generate profits from the total capital employed has improved.

Comparing the data from 2023 to 2019, there is a general upward trend in return on total capital, with occasional fluctuations. This indicates that Pricesmart Inc. has been using its total capital more efficiently to generate returns for its investors and stakeholders over the years.

The consistent increase in return on total capital demonstrates the company's effective utilization of its capital resources to generate profit, which could be attributed to improved operational efficiency, better investment decisions, and effective cost management.

Overall, the rising trend in return on total capital reflects positively on Pricesmart Inc.'s financial performance and management's ability to optimize its capital structure for profitability. This trend may indicate a sound financial position and prudent capital allocation strategies, which could contribute to the company's long-term sustainability and growth.