KLA-Tencor Corporation (KLAC)
Liquidity ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 2.62 | 2.15 | 2.24 | 2.50 | 2.71 |
| Quick ratio | 1.65 | 1.40 | 1.38 | 1.65 | 1.88 |
| Cash ratio | 1.10 | 0.97 | 0.87 | 0.94 | 1.19 |
The liquidity ratios of KLA-Tencor Corporation over the period from June 30, 2021, to June 30, 2025, reveal a downward trend in the company's short-term liquidity position.
The current ratio, which measures the company's ability to meet its short-term obligations with its total current assets, declined from 2.71 in 2021 to 2.24 in 2023, before slightly decreasing further to 2.15 in 2024. This decrease indicates a narrowing buffer of current assets relative to current liabilities, although the ratio remains above the generally acceptable threshold of 1.0, suggesting continued sufficient liquidity. In 2025, the current ratio increases modestly to 2.62, indicating a potential improvement in current asset management or liabilities structure.
The quick ratio, which excludes inventories from current assets for a more stringent measure of liquidity, also shows a downward trend from 1.88 in 2021 to 1.38 in 2023, reflecting tightening liquidity margins. The quick ratio stabilizes slightly in 2024 at 1.40 before increasing again to 1.65 in 2025. This suggests a somewhat improved ability to cover short-term liabilities with liquid assets excluding inventories.
The cash ratio, representing the most conservative liquidity measure by considering only cash and cash equivalents, follows a similar pattern. It decreases from 1.19 in 2021 to 0.87 in 2023, indicating a reduction in immediate cash availability relative to current liabilities. The ratio recovers to 0.97 in 2024 and rises further to 1.10 in 2025, suggesting an enhancement in the company's cash holdings in the most recent year.
Overall, the data indicates that KLA-Tencor experienced a period of declining short-term liquidity from 2021 through 2023. However, the slight recovery in 2024 and especially in 2025 suggests an improvement in liquidity position, primarily driven by increased cash holdings. The ratios remain within acceptable ranges, but the trend warrants monitoring for potential liquidity risks, particularly if the downward trend resumes.
See also:
Additional liquidity measure
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 287.38 | 323.16 | 284.12 | 252.98 | 239.69 |
The cash conversion cycle (CCC) of KLA-Tencor Corporation has exhibited a consistent upward trend over the period from June 30, 2021, to June 30, 2024, followed by a notable decline in 2025. Specifically, the CCC increased from approximately 239.69 days in 2021 to 252.98 days in 2022, reflecting a modest elongation in the time it takes for the company to convert its investments in inventory and accounts receivable into cash flow, relative to its accounts payable.
The trend continued through 2023, with the cycle lengthening further to approximately 284.12 days. This suggests an increase in the duration of the company's operating cycle, potentially due to longer inventory holding periods or extended receivables collection processes, without a proportional decrease in the payable period. The increase in cycle length indicates a strategic or operational shift that resulted in cash being tied up for a longer duration.
In 2024, the CCC reached its peak at approximately 323.16 days, representing a significant extension from the previous years. This peak indicates a period during which the company’s net operating cycle became significantly prolonged, potentially impacting liquidity and working capital management.
However, in 2025, the CCC decreased to approximately 287.38 days. This reduction suggests an improvement in the efficiency of working capital management, potentially through more effective inventory control, faster receivables collections, or extended payables. Despite the decrease, the cycle remained substantially longer than the initial levels observed in 2021, implying that the company continued to operate with a relatively extended cash conversion cycle.
Overall, the data indicates a pattern of increasing operating cycle length over the initial years, reaching a peak in 2024, followed by a partial year-over-year improvement in 2025. The fluctuations reflect changes in operational efficiency, inventory management, receivables collection, or payables policies, and are critical for assessing the company's liquidity and working capital strategies over this period.