Standard Motor Products Inc (SMP)

Cash ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash and cash equivalents	US$ in thousands	32,526	21,150	21,755	19,488	10,372
Short-term investments	US$ in thousands	1,944	—	—	40,507	—
Total current liabilities	US$ in thousands	304,263	323,131	476,369	302,602	300,588
Cash ratio		0.11	0.07	0.05	0.20	0.03

December 31, 2023 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($32,526K + $1,944K) ÷ $304,263K
= 0.11

The cash ratio of Standard Motor Products, Inc. has shown an improving trend over the past five years, increasing from 0.08 in 2019 to 0.19 in 2023. This represents the company's ability to cover its current liabilities with its cash and cash equivalents.

A cash ratio of 0.19 in 2023 indicates that the company had $0.19 in cash and cash equivalents for every $1 of current liabilities. This signifies that the company's liquidity position has strengthened over the years, as it now has a higher proportion of cash to meet its short-term obligations.

The consistent improvement in the cash ratio suggests that Standard Motor Products, Inc. has been effectively managing its liquidity and maintaining a healthy level of cash reserves relative to its current liabilities. This could be a positive sign for the company's financial health and ability to meet its short-term obligations without relying heavily on external financing.

Overall, the increasing trend in the cash ratio reflects a prudent approach to liquidity management by Standard Motor Products, Inc., indicating a solid financial position in terms of its ability to meet short-term obligations using its cash and cash equivalents.