KLA-Tencor Corporation (KLAC)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Inventory turnover	1.43	1.29	1.47	1.67	1.76
Receivables turnover	5.37	4.89	5.42	4.57	4.72
Payables turnover	9.99	10.93	11.37	8.10	8.10
Working capital turnover	1.84	1.83	2.27	2.14	1.93

The activity ratios for KLA-Tencor Corporation over the period from June 30, 2021, to June 30, 2025, exhibit notable trends in inventory management, receivables collection, payables payment, and overall working capital efficiency.

Inventory Turnover:
The inventory turnover ratio demonstrates a gradual decline over the period, decreasing from 1.76 in 2021 to 1.47 in 2023, then declining further to 1.29 in 2024 before a slight uptick to 1.43 in 2025. This trend indicates a diminishing efficiency in inventory management, implying that inventory is being sold or converted into sales more slowly over time, with a brief stabilization period in 2025.

Receivables Turnover:
The receivables turnover ratio shows variation across the analyzed years. It decreased slightly from 4.72 in 2021 to 4.57 in 2022, then increased sharply in 2023 to 5.42, followed by a decrease to 4.89 in 2024, and a marginal increase to 5.37 in 2025. The overall pattern reflects improved collection efficiency in 2023, although some fluctuation persists, suggesting variability in credit policy effectiveness or customer payment behaviors.

Payables Turnover:
The payables turnover ratio remained constant at 8.10 in 2021 and 2022, before experiencing a significant increase to 11.37 in 2023. Subsequently, it decreased slightly to 10.93 in 2024 and further to 9.99 in 2025. The rise in 2023 indicates a shorter period to settle payables, possibly reflecting improved payment terms or stronger cash flow management, whereas the subsequent decline suggests a relaxation or extension in payment terms.

Working Capital Turnover:
The working capital turnover ratio exhibits a generally increasing trend from 1.93 in 2021 to 2.27 in 2023, indicating heightened efficiency in utilizing working capital to generate sales. However, in 2024, the ratio declines to 1.83, and remains relatively stable at 1.84 in 2025. This fluctuation suggests some variability in managing working capital relative to sales, though the overall trend before 2024 points toward improved operational efficiency.

Summary:
Overall, KLA-Tencor's activity ratios reveal a pattern of declining inventory turnover efficiency and fluctuating receivables collection, alongside a peak in payables turnover in 2023 followed by stabilization. The working capital turnover demonstrates initial improvement followed by a slight decrease. These trends could reflect strategic shifts in inventory management, credit policies, and supplier relationships, impacting the company's operational efficiency over the analyzed period.

Average number of days

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Days of inventory on hand (DOH)	days	255.93	281.99	248.92	218.13	207.42
Days of sales outstanding (DSO)	days	67.98	74.57	67.30	79.89	77.31
Number of days of payables	days	36.53	33.40	32.10	45.04	45.04

The analysis of KLA-Tencor Corporation’s activity ratios over the specified period reveals notable trends across inventory management, receivables collection, and payables utilization.

The Days of Inventory on Hand (DOH) have exhibited a consistent upward trajectory. Starting at 207.42 days as of June 30, 2021, the ratio increased to 218.13 days in 2022 and continued this climb to 248.92 days in 2023. The upward trend further persisted into 2024, reaching 281.99 days. Although there was a slight decline to 255.93 days in 2025, the overall pattern suggests a substantial increase in the inventory holding period over the four-year span. This trend indicates a propensity to maintain inventory for extended periods, which could reflect strategic accumulation, slower inventory turnover, or challenges in inventory liquidation.

Conversely, the Days of Sales Outstanding (DSO) have demonstrated relative stability with slight fluctuations. Starting at 77.31 days in 2021, the DSO increased marginally to 79.89 days in 2022. By 2023, it decreased notably to 67.30 days, indicating an improved collection cycle. The DSO then experienced a modest rise to 74.57 days in 2024, followed by a slight decrease to 67.98 days in 2025. Overall, the DSO remains within a range that reflects moderate accounts receivable collection periods, with some improvement observed in 2023.

The Number of Days of Payables indicates a more stable pattern, maintaining an average around 45 days for 2021 and 2022 at exactly 45.04 days. In 2023, this decreased to 32.10 days, suggesting earlier payments or faster turnover of payables. In 2024, payables days slightly increased to 33.40 days, and in 2025, rose further to 36.53 days. The variations suggest a cautious approach in managing supplier payments, with a tendency toward extending payables slightly over time but remaining within a relatively stable range.

In summary, the activity ratios reflect a significant elongation in inventory holding periods, which may impact working capital and liquidity considerations. The receivables collection cycle has generally improved or remained stable, indicating effective management of customer credit. The payables cycle has maintained relative stability with minor fluctuations, reflecting prudent management of supplier relationships and cash flows.

Long-term

	Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Fixed asset turnover	—	—	10.17	10.84	10.44
Total asset turnover	0.76	0.64	0.75	0.73	0.67

The analysis of KLA-Tencor Corporation's long-term activity ratios reveals the following trends based on the provided data.

Fixed Asset Turnover Ratio (FATR):
The FATR indicates how efficiently the company utilizes its fixed assets to generate sales. From June 30, 2021, to June 30, 2023, this ratio experienced a modest increase, rising from 10.44 to 10.84. This suggests a slight improvement in asset utilization efficiency during this period. However, between 2022 and 2023, the ratio declined marginally to 10.17, indicating a potential slight decrease in fixed asset utilization efficiency. Absence of data beyond June 30, 2023, precludes analysis of longer-term trends but suggests that the company's fixed asset productivity stabilized around this period.

Total Asset Turnover Ratio (TATR):
The TATR measures the company's overall efficiency in using all assets to generate sales. The ratio increased steadily from 0.67 (June 30, 2021) to 0.73 (June 30, 2022) and further to 0.75 (June 30, 2023), indicating an improvement in overall asset efficiency. A slight decline to 0.64 is observed for June 30, 2024, which could reflect a temporary reduction in asset utilization or strategic asset expansion without corresponding sales growth. Notably, the ratio reverts to its higher level at 0.76 for June 30, 2025, resuming an upward trend and indicating a return to or improvement in overall asset efficiency.

Summary:
Overall, KLA-Tencor's fixed asset turnover ratio demonstrates relative stability with minor fluctuations, suggesting consistent utilization of fixed assets. The total asset turnover ratio shows a trend of improvement over the observed periods, with a brief dip before returning to higher levels, indicating an overall enhancement in the company's effectiveness in leveraging its total assets to generate revenue. The fluctuations within these ratios reflect dynamic operational efficiencies, but the general trend points toward maintained or improved asset utilization efficiency.