Lam Research Corp (LRCX)

Days of inventory on hand (DOH)

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Inventory turnover		2.17	2.27	2.67	3.33	3.36
DOH	days	168.40	160.58	136.90	109.58	108.58

June 30, 2024 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 2.17
= 168.40

Lam Research Corp's Days of Inventory on Hand (DOH) have shown a general increasing trend over the past five years, indicating potential inefficiencies in managing inventory levels. In particular, the DOH increased from 108.58 days in 2020 to 168.40 days in 2024, highlighting a significant prolongation in the company's inventory turnover cycle.

The substantial rise in DOH suggests that Lam Research Corp may be facing challenges in efficiently selling its products or managing inventory levels effectively. This can lead to increased carrying costs, the risk of obsolescence, and potential cash flow constraints due to tied-up capital in unsold inventory.

It is essential for the company to closely monitor and optimize its inventory management practices to improve operational efficiency, reduce costs, and enhance overall profitability. Analyzing the underlying factors contributing to the increase in DOH can provide insights for implementing strategies to streamline inventory turnover and mitigate associated risks in the future.