Standard Motor Products Inc (SMP)

Short-term

Turnover ratios

Standard Motor Products, Inc. has shown some fluctuations in its activity ratios over the past five years.

1. Inventory turnover: This ratio measures how many times a company sells and replaces its inventory during a period. Standard Motor Products' inventory turnover has decreased slightly from 2.08 in 2019 to 1.85 in 2023, indicating that the company is selling its inventory at a slightly slower pace in recent years.

2. Receivables turnover: This ratio reflects how efficiently a company is collecting its accounts receivable. Standard Motor Products has experienced some variability in this ratio, with a peak of 8.47 in 2023 and a low of 5.70 in 2020. Overall, the company's ability to collect receivables has improved over the years.

3. Payables turnover: This ratio measures how quickly a company is paying its suppliers. Standard Motor Products has seen fluctuations in its payables turnover, with a significant increase from 6.72 in 2021 to 11.08 in 2022, followed by a decrease to 9.02 in 2023. This suggests that the company has been managing its payments to suppliers more efficiently in recent years.

4. Working capital turnover: This ratio indicates how effectively a company is using its working capital to generate revenue. Standard Motor Products' working capital turnover has varied over the years, with a peak of 5.53 in 2021 and a low of 3.09 in 2023. The decrease in this ratio indicates a potential decline in the company's efficiency in utilizing its working capital to generate sales.

Overall, Standard Motor Products, Inc. has shown mixed performance in its activity ratios, with improvements in accounts receivable turnover and payables turnover, but a slight decline in inventory turnover and working capital turnover. It is important for the company to continue monitoring and managing these ratios to ensure optimal efficiency in its operations.

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Average number of days

Standard Motor Products, Inc.'s activity ratios indicate the efficiency of its operations in managing inventory, collecting receivables, and paying suppliers.

1. Days of Inventory on Hand (DOH): The trend in DOH shows an increasing trend from 2019 to 2023, suggesting that the company is holding onto inventory for longer periods. This may indicate inefficiencies in inventory management or challenges in forecasting demand accurately.

2. Days of Sales Outstanding (DSO): DSO measures how quickly the company collects its accounts receivable. The decreasing trend from 2020 to 2023 is a positive sign, indicating that the company is improving its collection efforts and converting sales into cash more effectively.

3. Number of Days of Payables: The trend in payables days fluctuates but shows a general stability over the years. The increase in 2021 may suggest that the company was taking longer to pay its suppliers. However, the subsequent decrease in 2022 and increase again in 2023 indicates fluctuations in the company's payment practices.

Overall, Standard Motor Products, Inc. should focus on optimizing its inventory management to reduce the number of days inventory is held, while maintaining efficient collection of receivables and managing payables effectively to enhance its working capital management and overall operational efficiency.

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Long-term

Standard Motor Products, Inc.'s long-term activity ratios reflect the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover ratio has shown a decreasing trend from 12.80 in 2022 to 11.15 in 2023, indicating a decline in the company's ability to generate sales using its fixed assets. This could be due to factors such as underutilization of fixed assets or a decrease in production efficiency.

On the other hand, the total asset turnover ratio has also exhibited a decreasing trend from 1.25 in 2019 to 1.05 in 2023. This suggests that the company's overall efficiency in generating sales from all its assets has decreased over the years. A decline in total asset turnover could be indicative of issues such as excess inventory, inefficient management of working capital, or a decrease in sales relative to total assets.

Overall, Standard Motor Products, Inc. may need to reassess its asset utilization strategies and operational efficiency to improve its long-term activity ratios and enhance its overall financial performance.