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.