Standard Motor Products Inc (SMP)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	65,803	91,174	123,958	86,683	85,948
Interest expense	US$ in thousands	13,287	10,617	2,028	2,328	5,286
Interest coverage		4.95	8.59	61.12	37.23	16.26

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $65,803K ÷ $13,287K
= 4.95

Standard Motor Products, Inc.'s interest coverage ratio has fluctuated over the past five years, indicating varying degrees of the company's ability to cover its interest expenses with its operating income. The interest coverage ratio was 7.33 in 2023, down from 10.31 in 2022. This decrease suggests that the company's ability to pay interest expenses decreased in 2023 compared to 2022.

The significant decrease in the interest coverage ratio in 2023 compared to 2021, when it was 65.43, indicates a potential concern as the company may be less capable of meeting its interest obligations with its current level of operating income. This large decline in the interest coverage ratio could be a result of changes in the company's profitability or an increase in its interest expenses.

It is worth noting that the interest coverage ratio was relatively stable in the previous years, such as 2020 and 2019, at 48.44 and 18.91, respectively. The significant fluctuations over the last five years suggest that Standard Motor Products, Inc. may have experienced changes in its financial performance or capital structure that impacted its ability to cover interest expenses. Further investigation and analysis of the company's financial health and operational efficiency may be necessary to understand the underlying reasons for these fluctuations in the interest coverage ratio.