Standard Motor Products Inc (SMP)

Short-term

Turnover ratios

Standard Motor Products, Inc.'s inventory turnover ratio has remained relatively stable over the past eight quarters, ranging between 1.85 and 2.04, indicating that the company is able to sell and replace its inventory approximately once every 1.85 to 2.04 quarters. This shows consistent efficiency in managing its inventory levels.

The receivables turnover ratio has varied significantly, from a low of 5.93 to a high of 8.47. This suggests that the efficiency of collecting receivables has been somewhat volatile, although there seems to have been an improvement in the most recent quarter.

In terms of payables turnover, the company has generally been able to extend its payables over a longer period, with ratios ranging from 6.90 to 11.08. This indicates that Standard Motor Products, Inc. has been successful in managing its payment obligations effectively, benefiting from favorable credit terms with its suppliers.

The working capital turnover ratio has shown some fluctuations, with values ranging from 2.85 to 5.57. This metric reflects how effectively the company is managing its working capital to generate sales. The variations in this ratio may indicate changes in the company's operational efficiency and capital utilization over the quarters.

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Average number of days

Standard Motor Products, Inc.'s activity ratios indicate the efficiency of its operations in managing inventory, accounts receivable, and accounts payable.

The Days of Inventory on Hand (DOH) increased from 195.07 days in Q4 2022 to 197.78 days in Q4 2023, suggesting that the company took longer to sell its inventory. A higher DOH may indicate slower inventory turnover, potentially signaling overstocking or declining sales.

The Days of Sales Outstanding (DSO) increased from 44.60 days in Q4 2022 to 43.07 days in Q4 2023, showing an improvement in collecting receivables. A decreasing trend in DSO indicates that the company is collecting payments from customers more quickly, which is a positive sign for liquidity.

The Number of Days of Payables decreased from 32.93 days in Q4 2022 to 40.46 days in Q4 2023, indicating that the company is taking longer to pay its suppliers. This increase in days payable outstanding could signify a potential delay in settling obligations, which may impact relationships with suppliers.

Overall, the company should focus on efficiently managing inventory levels to improve inventory turnover, maintaining a balance between collecting receivables promptly and managing payables effectively to optimize cash flow and working capital management.

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Long-term

Standard Motor Products, Inc. has shown consistency in its long-term activity ratios over the past eight quarters.

The Fixed Asset Turnover ratio has remained relatively stable, ranging from a low of 11.15 in Q4 2023 to a high of 13.18 in Q3 2022. This indicates that the company generates between 11 and 13 times in sales revenue for every dollar invested in fixed assets. The consistency in this ratio suggests that Standard Motor Products efficiently utilizes its fixed assets to generate sales.

On the other hand, the Total Asset Turnover ratio has shown more fluctuation, ranging from 1.03 to 1.09 over the same period. This ratio indicates that the company generates between 1.03 and 1.09 in sales revenue for every dollar invested in total assets. The slight decline in total asset turnover from Q4 2022 to Q1 2023 may suggest a decrease in the efficiency of utilizing total assets to generate sales. However, the ratio has remained relatively stable around the 1.05 level, indicating that the company is effectively using its total assets to generate revenue.

Overall, the analysis of the long-term activity ratios suggests that Standard Motor Products, Inc. efficiently utilizes both its fixed assets and total assets to generate sales revenue, with a slight fluctuation in the total asset turnover ratio.