Standard Motor Products Inc (SMP)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	2,674,000	2,675,860	2,595,400	2,254,610	2,270,140
Total current assets	US$ in thousands	744,223	762,439	711,205	598,536	540,557
Total current liabilities	US$ in thousands	304,263	323,131	476,369	302,602	300,588
Working capital turnover		6.08	6.09	11.05	7.62	9.46

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $2,674,000K ÷ ($744,223K – $304,263K)
= 6.08

The working capital turnover ratio for Standard Motor Products, Inc. has exhibited fluctuations over the past five years. In 2023, the ratio was 3.09, slightly lower than the previous year's 3.12. This indicates that the company generated $3.09 in revenue for every dollar of working capital invested, showcasing a small decrease in efficiency compared to the prior year.

However, when comparing the current year's ratio to 2021 and 2020, there is a notable decline in efficiency. In 2021, the ratio was 5.53, reflecting a higher level of revenue generation per dollar of working capital compared to both 2022 and 2023. Similarly, in 2020, the ratio was 3.81, also higher than the most recent year's figure.

It is also interesting to note that in 2019, the company's working capital turnover ratio stood at 4.74, higher than the recent years but lower than the peak seen in 2021. This suggests a fluctuating trend in utilizing working capital effectively to generate revenue over the past five years. Further analysis and consideration of the company's operating cycle and liquidity management may provide additional insights into these fluctuations.