Lam Research Corp (LRCX)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Inventory turnover	2.20	2.00	1.95	1.95	1.86	1.75	1.77	1.84	2.00	2.14	2.16	2.24	2.36	2.60	2.89	2.95	2.91	2.78	2.71	2.77
Receivables turnover	5.46	5.31	4.90	5.31	5.92	6.46	5.29	5.63	6.17	5.77	4.68	3.93	3.99	4.52	4.86	4.64	4.83	4.72	4.11	4.77
Payables turnover	—	10.44	10.33	11.63	12.79	14.24	15.69	16.55	20.50	17.33	11.33	8.51	9.25	8.99	9.31	10.12	9.43	9.33	8.82	8.94
Working capital turnover	2.32	2.15	1.96	1.91	1.74	1.77	1.63	1.81	1.93	2.03	2.08	2.10	2.23	2.18	2.01	2.04	1.80	1.72	1.51	1.41

The activity ratios for Lam Research Corp over the period examined reveal several noteworthy trends and patterns:

Inventory Turnover:
The company's inventory turnover ratio demonstrates a general downward trend from a high of approximately 2.95 as of September 2021, declining to a low of around 1.75 by March 2024. This declining trend suggests that inventory is being held longer on average over time, potentially indicating increased buildup of inventory or slower sales relative to inventory levels. However, recent quarters show some stabilization, with a slight increase to approximately 2.00 by June 2025, indicating a modest improvement in inventory management or sales velocity.

Receivables Turnover:
Receivables turnover ratios display fluctuations but overall a moderate upward trend in the last few quarters. Starting from approximately 4.77 in September 2020, the ratio dips somewhat but then rises significantly, reaching over 6.17 by June 2023. This indicates an improving efficiency in collecting accounts receivable, with shorter periods needed to convert receivables into cash. Such an increase could reflect better credit management or more stringent collection policies improving cash flow.

Payables Turnover:
The payables turnover ratio exhibits considerable volatility. Initially, it remains relatively stable, hovering around 8.9 to 10.1 between September 2020 and September 2021. From late 2021 onwards, the ratio shows a sharp increase, reaching as high as 20.50 in June 2023, implying a significant reduction in the average number of days the company takes to pay its suppliers. This can be interpreted as Lam Research accelerating its payments or perhaps facing shorter payment terms. Post-2023, the ratio declines somewhat, returning to approximately 10–16, suggesting adjustments in payment strategies or supplier terms.

Working Capital Turnover:
The working capital turnover ratio shows a gradual upward trend from approximately 1.41 in September 2020 to around 2.32 in June 2025. This indicates that the company has been increasingly efficient in using its working capital to support sales activities, potentially through better inventory and receivables management or improved operational efficiencies.

Summary:
Overall, Lam Research's activity ratios reflect a period of transition. The decreasing inventory turnover ratio suggests inventory is being held longer, which could be due to inventory buildup or changes in sales cadence. Conversely, rising receivables turnover and working capital turnover ratios suggest improvements in receivables collection and overall operational efficiency. The fluctuations in the payables turnover ratio highlight variations in payment practices, possibly affecting liquidity and supplier relationships. The recent stabilization and modest improvement in some ratios indicate ongoing adjustments aligned with strategic operational changes or market conditions.

Average number of days

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	166.28	182.92	187.30	187.61	196.06	208.43	206.21	198.24	182.14	170.80	168.96	163.06	154.83	140.32	126.45	123.66	125.51	131.15	134.56	131.76
Days of sales outstanding (DSO)	days	66.88	68.76	74.42	68.76	61.69	56.48	69.02	64.79	59.13	63.20	78.07	92.78	91.50	80.74	75.17	78.71	75.53	77.25	88.75	76.52
Number of days of payables	days	—	34.97	35.34	31.38	28.54	25.63	23.26	22.05	17.80	21.06	32.23	42.87	39.47	40.61	39.18	36.07	38.72	39.11	41.39	40.84

The activity ratios for Lam Research Corp, focusing on days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, exhibit notable trends over the analyzed period from September 2020 to June 2025.

Days of Inventory on Hand (DOH):
Initially, the DOH hovered around 131 days in September 2020, experiencing minor fluctuations through December 2021, maintaining in the 120–130 days range. However, a significant upward trend commenced thereafter, with DOH increasing markedly to 140 days by March 2022. This escalation continued sharply in subsequent periods, reaching over 200 days by December 2024, peaking at approximately 208 days in March 2024. Despite a slight decrease to 196 days in June 2024 and 187 days in September 2024, the inventory holding period remained elevated compared to historical levels. This indicates a considerable accumulation of inventory over the period, reflecting either intentional stockpiling, slower inventory turnover, or increased inventory levels possibly associated with supply chain or production strategies.

Days of Sales Outstanding (DSO):
The DSO remained relatively stable from September 2020 through December 2021, oscillating around 75–89 days. Starting in early 2022, a downward trend emerged; DSO dropped markedly to approximately 63 days by March 2023 and even further to roughly 56 days in March 2024, signifying shorter receivable collection periods. Slight increases occurred afterward, with DSO stabilizing around mid-60 days, indicating an improvement in receivables management and faster collection cycles during the latter part of the period.

Days of Payables (Number of days of payables):
The payables period remained fairly consistent from September 2020 through June 2022, fluctuating around 38–42 days. After that, a significant decline was observed, with payables days decreasing sharply to approximately 21 days by March 2023. Subsequently, the payables period stabilized in the low 20s to mid-30s, with the latest recorded value at 34.97 days in March 2025. This reduction suggests that the company was paying suppliers more promptly over time, potentially reflecting improved cash flow management or strategic creditor payment policies.

Summary:
The activity ratios reveal a pattern of increasing inventory holdings, indicating a possible strategic buildup or delayed turnover after 2021. Conversely, the receivables period declined significantly, reflecting tighter collection practices or improved credit policies. The payables period generally shortened, indicating that Lam Research may have been accelerating payments to suppliers. Overall, these shifts demonstrate an evolving working capital management strategy characterized by increasing inventory levels juxtaposed with more efficient receivables collection and quicker payables settlement.

Long-term

	Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Fixed asset turnover	—	—	—	—	—	—	—	7.50	8.30	10.15	10.21	10.46	10.44	10.72	10.99	11.48	11.22	10.37	9.87	9.75
Total asset turnover	0.86	0.86	0.82	0.80	0.80	0.78	0.76	0.85	0.93	0.98	0.99	0.96	1.00	1.01	0.99	1.01	0.92	0.87	0.78	0.73

The provided data indicates that Lam Research Corp’s long-term activity ratios, specifically the Fixed Asset Turnover and Total Asset Turnover ratios, have undergone notable fluctuations over the period from September 2020 to June 2023.

Fixed Asset Turnover:
This ratio measures the company's efficiency in generating sales from its fixed assets. Starting at 9.75 in September 2020, the ratio generally exhibited an upward trend, reaching a peak of 11.48 in September 2021, which signifies an improved utilization of fixed assets during this period. Subsequently, the ratio displayed a gradual decline, with values around 10.21 in December 2022 to 7.50 by September 2023. The sharp decrease towards the end of the observed period suggests a reduction in the efficiency of fixed asset utilization or possible changes in asset composition or investment strategies.

Total Asset Turnover:
This ratio indicates how effectively the company is using its total assets to generate sales. It increased from 0.73 in September 2020 to approximately 1.01 by September 2021, signaling enhanced overall asset efficiency during this timeframe. Following this peak, the ratio experienced a downward trend, reaching about 0.76 in December 2023, which reflects decreased efficiency in asset utilization. Slight recoveries are observed subsequently, with values around 0.86 in March and June 2025, indicating potential stabilization or minor improvements in asset efficiency.

Overall Analysis:
From late 2020 to early 2022, Lam Research exhibited a period of rising asset efficiency, as evidenced by increasing Fixed Asset Turnover and Total Asset Turnover ratios. However, post-2021, both ratios generally trended downward, suggesting a decline in the company's ability to generate sales from its fixed and total assets. The decline in these ratios could be attributable to various factors, including increased asset base without proportional sales growth, changes in production capacity, investment in new assets not yet contributing to sales, or strategic shifts affecting asset utilization.

In conclusion, while Lam Research showed strong asset utilization performance during 2020–2021, recent periods have reflected declining trends in long-term activity ratios, indicating a need for assessment of asset management efficiency and strategic asset deployment moving forward.