Standard Motor Products Inc (SMP)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	132.97	139.04	130.87	105.15	111.93
Days of sales outstanding (DSO)	days	21.88	22.87	25.40	32.06	21.79
Number of days of payables	days	30.78	25.52	42.48	35.52	32.12
Cash conversion cycle	days	124.06	136.38	113.79	101.69	101.59

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 132.97 + 21.88 – 30.78
= 124.06

Standard Motor Products, Inc.'s cash conversion cycle has fluctuated over the past five years. The cycle peaked at 206.75 days in 2022 before decreasing to 200.40 days in 2023. This indicates that, on average, it took the company 200.40 days to convert its investments in inventory and other resources into cash during the most recent fiscal year.

A longer cash conversion cycle suggests that the company takes more time to sell its inventory and collect receivables, potentially impacting its liquidity and working capital management. Conversely, a shorter cycle can indicate more efficient operations and stronger cash flow generation.

The trend over the past five years shows some variability, with the cycle ranging from 177.23 days to 206.75 days. Further analysis of the components contributing to the cash conversion cycle, such as the days inventory outstanding, days sales outstanding, and days payable outstanding, would provide additional insights into Standard Motor Products, Inc.'s working capital management efficiency.