Simulations Plus Inc (SLP)

Working capital turnover

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Revenue	US$ in thousands	59,577	53,906	46,466	41,589	33,970
Total current assets	US$ in thousands	130,372	146,790	139,313	129,092	21,165
Total current liabilities	US$ in thousands	11,987	7,735	11,574	5,506	4,783
Working capital turnover		0.50	0.39	0.36	0.34	2.07

August 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $59,577K ÷ ($130,372K – $11,987K)
= 0.50

The working capital turnover ratio for Simulations Plus Inc. has fluctuated over the past five years. In 2023, the ratio stood at 0.50, representing an improvement from the previous year's 0.39. This indicates that the company generated half a dollar of revenue for each dollar of working capital employed. The increase in the ratio suggests a more efficient use of working capital to generate sales compared to the prior year.

In 2022, the ratio was 0.39, marking a slight increase from 0.36 in 2021 but still lower than the 2020 ratio of 0.34. This suggests a potential improvement in the company's management of working capital but also indicates that the efficiency in utilizing working capital to generate revenue has varied over these years.

It is worth noting that in 2019, the working capital turnover ratio was significantly higher at 2.07, indicating a substantially more efficient use of working capital to generate revenue compared to the subsequent years. This suggests a deviation from the company's recent performance, warranting further analysis into the factors driving this change in efficiency.

Overall, the working capital turnover ratio for Simulations Plus Inc. has exhibited variability, with the recent improvement in 2023 potentially indicating better management of working capital to support revenue generation.