Standard Motor Products Inc (SMP)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 219.21 | 197.78 | 202.34 | 194.41 | 168.29 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 219.21 | 197.78 | 202.34 | 194.41 | 168.29 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 219.21 + — – —
= 219.21
Standard Motor Products Inc's cash conversion cycle has shown an increasing trend over the past five years, starting at 168.29 days on December 31, 2020 and reaching 219.21 days by December 31, 2024. This indicates that the company takes longer to convert its investments in inventory and accounts receivable into cash, which may suggest inefficiencies in its working capital management.
The company's cash conversion cycle peaked at 219.21 days on December 31, 2024, reflecting a delay in receiving cash from its sales and turning over its inventory and receivables. This extended cycle could potentially strain the company's liquidity and working capital position, leading to increased financing costs and impacting overall profitability and cash flow generation.
It is essential for Standard Motor Products Inc to closely monitor and improve its cash conversion cycle to enhance operational efficiency, optimize inventory management, and accelerate cash flows. By implementing effective strategies to shorten the cycle, such as streamlining supply chain processes, improving inventory turnover, and managing accounts receivable efficiently, the company can enhance its financial performance and strengthen its liquidity position in the long run.
Peer comparison
Dec 31, 2024