Standard Motor Products Inc (SMP)

Quick ratio

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 US$ in thousands 32,526 28,485 23,019 24,196 21,150 17,525 14,186 19,999 21,755 33,144 27,453 17,100 19,488 16,781 22,510 13,268 10,372 13,259 17,419 11,746
Short-term investments US$ in thousands 1,944 — — — — — — — — 42,123 42,070 40,684 40,507 38,945 — — — — — —
Receivables US$ in thousands 160,282 208,053 218,105 210,801 167,638 230,442 229,657 225,303 180,604 224,421 211,778 174,104 198,039 238,045 184,518 165,685 135,516 168,968 179,386 174,164
Total current liabilities US$ in thousands 304,263 373,342 348,489 321,424 323,131 373,864 410,220 578,128 476,369 478,371 447,067 313,424 302,602 303,814 337,606 348,207 300,588 329,660 393,940 345,570
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

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($32,526K + $1,944K + $160,282K) ÷ $304,263K
= 0.64

The quick ratio of Standard Motor Products, Inc. provides insight into the company's ability to cover its short-term obligations with its most liquid assets. A quick ratio below 1 indicates potential liquidity challenges as it suggests that the company may have difficulty meeting its short-term debt obligations.

Looking at the data provided, we observe fluctuations in the quick ratio over the past eight quarters. In Q4 2023, the quick ratio was 0.72, indicating a slight decrease from the previous quarter. This could be a concerning trend as it suggests that the company's ability to meet its short-term obligations declined.

Comparing Q4 2023 to Q1 2023, we see a gradual decrease in the quick ratio from 0.88 to 0.72. This downward trend over consecutive quarters raises a red flag regarding the company's liquidity position. The decrease in the quick ratio could be attributed to a decline in current assets relative to current liabilities.

Furthermore, in Q1 and Q4 of 2022, the quick ratio was also at 0.72, indicating a consistent pattern of liquidity challenges during those periods.

On the positive side, there was an improvement in the quick ratio from Q1 2022 (0.49) to Q2 2023 (0.83). This suggests that the company enhanced its ability to cover short-term obligations during that period, potentially by increasing its liquid assets or reducing its current liabilities.

In conclusion, the quick ratio of Standard Motor Products, Inc. has shown fluctuations over the past eight quarters, with some periods indicating potential liquidity issues. Management should closely monitor and address these fluctuations to ensure the company's short-term financial health and ability to meet its obligations.