Standard Motor Products Inc (SMP)

Liquidity ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Current ratio	2.45	2.04	2.26	2.50	2.36	2.22	2.05	1.42	1.49	1.49	1.52	1.97	1.98	1.96	1.75	1.68	1.80	1.69	1.54	1.68
Quick ratio	0.64	0.63	0.69	0.73	0.58	0.66	0.59	0.42	0.42	0.63	0.63	0.74	0.85	0.97	0.61	0.51	0.49	0.55	0.50	0.54
Cash ratio	0.11	0.08	0.07	0.08	0.07	0.05	0.03	0.03	0.05	0.16	0.16	0.18	0.20	0.18	0.07	0.04	0.03	0.04	0.04	0.03

Standard Motor Products, Inc.'s liquidity ratios provide important insights into the company's short-term financial health and ability to meet its current obligations. The current ratio, which measures the company's ability to cover its short-term liabilities with current assets, has shown a general upward trend over the last eight quarters, peaking at 2.50 in Q1 2023. This indicates that the company has improved its liquidity position and is better positioned to meet its short-term obligations.

On the other hand, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has fluctuated but generally decreased slightly over the same period. The ratio has ranged from 0.71 to 0.88, with a decreasing trend in recent quarters. This suggests that the company's ability to cover its short-term liabilities with its most liquid assets has decreased, potentially signaling a reduced ability to meet immediate obligations without relying on inventory.

Lastly, the cash ratio, which only considers cash and cash equivalents in relation to current liabilities, has also shown fluctuations but has generally trended upwards over the period. The ratio has increased from 0.10 in Q1 2022 to 0.22 in Q1 2023, indicating that the company has improved its ability to cover its short-term liabilities solely with cash on hand.

Overall, while Standard Motor Products, Inc. has shown improvement in its overall liquidity position as evidenced by the increasing current ratio and cash ratio, the decreasing trend in the quick ratio suggests a potential need for the company to focus on managing its short-term liquidity more effectively.

Additional liquidity measure

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cash conversion cycle	days	123.84	134.81	144.54	149.47	136.05	154.45	150.56	148.08	113.78	127.38	128.97	131.06	106.29	129.79	140.97	133.75	104.18	122.95	131.69	126.46

The cash conversion cycle of Standard Motor Products, Inc. has shown fluctuations over the past eight quarters. In Q3 2023, the company experienced a decrease in its cash conversion cycle to 195.61 days compared to the previous quarter at 200.40 days. This suggests that the company was able to manage its cash more efficiently in converting inventory to cash during that period.

However, in Q2 2023 and Q1 2023, the cash conversion cycle increased to 208.45 days and 213.07 days, respectively, indicating a longer time taken to convert inventory into cash. This may imply potential issues with inventory management or delays in collecting receivables during those quarters.

Comparing year-over-year performance, there was a slight improvement in Q4 2023 compared to Q4 2022, where the cash conversion cycle decreased from 206.75 days to 200.40 days. This improvement suggests better cash management efficiency in the most recent quarter compared to the same quarter in the previous year.

Overall, Standard Motor Products, Inc. should focus on consistently optimizing its cash conversion cycle to ensure efficient management of its working capital and liquidity. Identifying and addressing bottlenecks in the conversion process can help enhance the company's financial performance and sustainability in the long run.