Lam Research Corp (LRCX)
Liquidity ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 2.21 | 2.97 | 3.16 | 2.69 | 3.30 |
| Quick ratio | 1.49 | 1.93 | 1.96 | 1.75 | 2.48 |
| Cash ratio | 0.97 | 1.35 | 1.28 | 0.80 | 1.62 |
The liquidity ratios of Lam Research Corp over the period from June 30, 2021, to June 30, 2025, demonstrate a pattern of fluctuating yet generally stable liquidity positions.
The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, was highest at 3.30 in 2021 and experienced a decline by 2022 to 2.69. Nevertheless, it recovered slightly in 2023 to 3.16 before decreasing again to 2.97 in 2024 and further declining to 2.21 in 2025. Despite this downward trend, the current ratio remained well above the commonly accepted threshold of 1.0, indicating that the company maintained sufficient overall short-term liquidity during this period.
The quick ratio, which refines the assessment by excluding inventory from current assets, followed a similar trend. It was highest at 2.48 in 2021, then fell sharply to 1.75 in 2022. This ratio recovered somewhat in 2023 to 1.96 but remained relatively stable in 2024 at 1.93 before declining again to 1.49 in 2025. The quick ratio consistently remained above 1.0, suggesting that the company generally retained the ability to cover immediate liabilities without relying on inventory sales.
The cash ratio, a more conservative liquidity measure assessing the company's capacity to pay off short-term liabilities with cash and cash equivalents alone, was 1.62 in 2021, indicating robust immediate liquidity. It dropped markedly to 0.80 in 2022, reflecting a decreased cash buffer. Subsequently, the cash ratio increased to 1.28 in 2023 and 1.35 in 2024, indicating a partial recovery. By 2025, the cash ratio slightly declined to 0.97 but still hovered near the critical threshold of 1.0, suggesting the company maintained enough cash on hand to meet its short-term obligations with some margin.
Overall, the analyzed liquidity ratios suggest that Lam Research Corp has maintained a relatively stable liquidity position over the analyzed period. Although there was a noticeable decline in liquidity metrics from 2021 to 2022, followed by partial recoveries, the ratios generally stayed above levels that indicate immediate insolvency or liquidity concerns. The fluctuations reflect typical operational and strategic adjustments but do not signal any significant deterioration in the company's ability to meet its short-term liabilities.
See also:
Additional liquidity measure
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 233.16 | 229.21 | 203.02 | 206.69 | 162.31 |
The cash conversion cycle (CCC) of Lam Research Corp over the specified period reflects notable fluctuations and trends. As of June 30, 2021, the CCC was 162.31 days, indicating the duration it takes from paying suppliers to collecting cash from customers. This metric increased significantly to 206.69 days by June 30, 2022, suggesting a lengthening of the overall cycle and potentially indicating delays in accounts receivable collections or inventory management inefficiencies during that period.
The CCC stabilized somewhat by June 30, 2023, at 203.02 days, showing only a marginal decrease compared to the previous year, although it still remained elevated relative to the 2021 level. This stagnation suggests that the company's operational efficiencies had not substantially improved, and the cycle remained relatively extended.
A further increase is observed by June 30, 2024, with the CCC reaching 229.21 days. This extension could be attributed to prolonged inventory holding periods, delayed receivables, or extended payment terms to suppliers. The upward trend continued into June 30, 2025, where the CCC was reported at 233.16 days, marking the longest cycle within this period. Such an increase indicates that it takes longer for the company to convert its investments in inventory and receivables into cash, potentially impacting liquidity and working capital management.
Overall, the data indicates a persistent elongation of the cash conversion cycle over the four-year period. This trend may reflect strategic or operational factors such as changes in customer payment behaviors, supply chain dynamics, or credit policies. Extended CCC durations can imply increased working capital requirements and could influence the company's liquidity position and operational efficiency.