Standard Motor Products Inc (SMP)

Financial leverage 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
Total assets	US$ in thousands	1,293,050	1,299,930	1,302,140	1,320,020	1,254,930	1,318,730	1,326,550	1,310,410	1,197,960	1,195,730	1,155,280	976,482	956,540	950,997	944,765	940,711	903,854	920,683	969,527	912,734
Total stockholders’ equity	US$ in thousands	635,064	629,348	629,673	621,644	610,020	599,387	601,586	611,871	601,580	587,018	583,616	556,940	550,236	544,904	510,656	496,613	504,228	494,052	485,265	473,040
Financial leverage ratio		2.04	2.07	2.07	2.12	2.06	2.20	2.21	2.14	1.99	2.04	1.98	1.75	1.74	1.75	1.85	1.89	1.79	1.86	2.00	1.93

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,293,050K ÷ $635,064K
= 2.04

Standard Motor Products, Inc.'s financial leverage ratio has been relatively stable over the past eight quarters, ranging from 2.04 to 2.21. The ratio measures the company's level of debt relative to its equity, indicating how much of its assets are financed through debt.

A financial leverage ratio above 1 indicates that the company relies more on debt financing than equity financing. In this case, Standard Motor Products, Inc. has consistently maintained a financial leverage ratio above 2, suggesting a relatively high level of debt in its capital structure.

A higher financial leverage ratio indicates higher financial risk, as the company has a larger proportion of debt that needs to be serviced. However, it can also amplify returns for shareholders when the company performs well. It is essential for investors and stakeholders to monitor this ratio, as significant changes could impact the company's financial stability and ability to meet its debt obligations. Standard Motor Products, Inc. should continue to manage its debt levels prudently to ensure long-term financial health and sustainability.