Standard Motor Products Inc (SMP)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,814,130 | 1,293,050 | 1,254,930 | 1,197,960 | 956,540 |
| Total stockholders’ equity | US$ in thousands | 615,745 | 635,064 | 610,020 | 601,580 | 550,236 |
| Financial leverage ratio | 2.95 | 2.04 | 2.06 | 1.99 | 1.74 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,814,130K ÷ $615,745K
= 2.95
Based on the financial leverage ratio data provided for Standard Motor Products Inc, the company's leverage ratio has been showing an increasing trend over the years. From 1.74 as of December 31, 2020, the ratio has steadily climbed to 2.95 as of December 31, 2024. This indicates that the company has been relying more on debt financing relative to its equity to support its operations and growth.
The increasing trend in the leverage ratio suggests that Standard Motor Products Inc has been taking on more debt to finance its activities. While leverage can amplify returns on equity when operations are performing well, it also exposes the company to higher financial risk, especially in times of economic downturn or rising interest rates. Investors and creditors may closely monitor this trend to assess the company's ability to meet its debt obligations and sustain profitability in the long run.
Peer comparison
Dec 31, 2024