Simulations Plus Inc (SLP)

Cash ratio

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Cash and cash equivalents	US$ in thousands	57,523	51,567	36,984	49,207	11,434
Short-term investments	US$ in thousands	57,940	76,668	86,620	66,804	0
Total current liabilities	US$ in thousands	11,987	7,735	11,574	5,506	4,783
Cash ratio		9.63	16.58	10.68	21.07	2.39

August 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($57,523K + $57,940K) ÷ $11,987K
= 9.63

The cash ratio of Simulations Plus Inc. has fluctuated over the past five years. As of August 31, 2023, the cash ratio stands at 10.03, reflecting a decrease from the previous year's ratio of 17.19. This downward trend is consistent with the ratios observed in 2021 and 2019, which were 11.19 and 3.37, respectively. However, the cash ratio was notably higher in 2020 at 22.10.

The declining cash ratio may indicate a reduction in the company's ability to cover its short-term liabilities with its readily available cash resources. This could raise concerns about liquidity and the ability to meet financial obligations in the short term. It would be beneficial for stakeholders to investigate the underlying factors contributing to this trend and assess the company's cash management and liquidity position in more detail.