Simulations Plus Inc (SLP)

Cash ratio

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Cash and cash equivalents	US$ in thousands	10,311	57,523	51,567	36,984	49,207
Short-term investments	US$ in thousands	9,944	57,940	76,668	86,620	66,804
Total current liabilities	US$ in thousands	12,069	11,987	7,735	11,574	5,506
Cash ratio		1.68	9.63	16.58	10.68	21.07

August 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($10,311K + $9,944K) ÷ $12,069K
= 1.68

The cash ratio measures the ability of Simulations Plus Inc to cover its short-term liabilities using its available cash and cash equivalents. The trend of Simulations Plus Inc's cash ratio over the past five years shows a fluctuating pattern.

In 2020, the company had a relatively high cash ratio of 21.07, indicating a strong ability to cover its short-term obligations with cash on hand. Subsequently, the cash ratio decreased significantly in 2021 to 10.68, suggesting a reduction in the company's liquidity position.

However, the cash ratio increased in 2022 to 16.58, indicating an improvement in the company's liquidity compared to the previous year. This positive trend continued in 2023, with a further increase in the cash ratio to 9.63.

By the end of 2024, the cash ratio stood at 1.68, representing a substantial drop from the previous year. This decline may signal a decrease in the company's ability to meet its short-term obligations with readily available cash.

Overall, the fluctuating trend of Simulations Plus Inc's cash ratio over the years suggests varying levels of liquidity and highlights the importance of monitoring the company's cash position to ensure its ability to meet short-term financial obligations.