Lam Research Corp (LRCX)
Liquidity 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.21 | 2.45 | 2.54 | 2.53 | 2.97 | 2.82 | 3.06 | 3.06 | 3.16 | 3.09 | 3.01 | 2.69 | 2.69 | 2.83 | 3.13 | 3.27 | 3.30 | 3.13 | 3.19 | 3.31 |
| Quick ratio | 1.49 | 1.58 | 1.68 | 1.69 | 1.93 | 1.78 | 1.95 | 1.88 | 1.96 | 1.94 | 1.90 | 1.77 | 1.75 | 1.92 | 2.26 | 2.35 | 2.48 | 2.38 | 2.49 | 2.63 |
| Cash ratio | 0.97 | 0.99 | 1.06 | 1.14 | 1.35 | 1.28 | 1.32 | 1.21 | 1.28 | 1.21 | 1.01 | 0.87 | 0.80 | 1.04 | 1.38 | 1.35 | 1.62 | 1.60 | 1.68 | 1.95 |
An examination of Lam Research Corp's liquidity ratios over the specified periods reveals a generally stable liquidity position with some fluctuations.
Current Ratio:
The current ratio has exhibited a relatively high and consistent level, indicative of a strong capacity to meet short-term obligations through current assets. The ratio ranged from a peak of 3.31 in September 2020, gradually declining to 2.21 in June 2025. Despite this decline, the ratio remains above 2.0 throughout the period, signaling robust liquidity. The downward trend suggests a gradual tightening of liquidity, possibly due to increases in current liabilities or reductions in current assets, but not to an extent that compromises liquidity health.
Quick Ratio:
Similarly, the quick ratio has maintained a comfortable margin, fluctuating between approximately 1.49 and 2.38. This ratio, which excludes inventory from current assets, reflects Lam Research’s ability to cover short-term liabilities with the most liquid assets. The decline from over 2.3 in September 2020 to approximately 1.49 in June 2025 indicates a modest reduction in quick assets relative to current liabilities, yet it remains well above 1.0, signifying satisfactory short-term solvency without reliance on inventory liquidation.
Cash Ratio:
The cash ratio, representing the most conservative liquidity measure based solely on cash and cash equivalents, has displayed more volatility. It started at 1.95 in September 2020, decreased to a low of 0.80 in June 2022, then recovered somewhat, averaging around 1.14 to 1.35 in the subsequent periods, before declining slightly below 1.0 in June 2025. Although the cash ratio dipped below 1 at times, it generally remained indicative of a healthy cash cushion, but the recent decline suggests a reduction in absolute cash holdings relative to short-term liabilities.
Overall Implication:
The data indicates that Lam Research Corp has maintained strong liquidity levels throughout the analyzed periods. The consistent high current and quick ratios affirm a solid capacity to meet short-term obligations, although the gradual decline hints at a strategic transformation in liquidity management or operational shifts. The cash ratio’s fluctuations point to varying cash levels, but overall, the company's liquidity profile remains strong, with reserves sufficient to support short-term financial stability even in periods of operational or market fluctuations.
See also:
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 233.16 | 216.71 | 226.38 | 224.99 | 229.21 | 239.28 | 251.97 | 240.97 | 223.46 | 212.95 | 214.80 | 212.97 | 206.85 | 180.45 | 162.43 | 166.30 | 162.31 | 169.29 | 181.92 | 167.44 |
The analysis of Lam Research Corp's cash conversion cycle (CCC) over the specified period reveals a trend of increasing duration, indicating progressively longer periods to convert investments in inventory and receivables into cash.
Starting from a CCC of approximately 167.44 days as of September 30, 2020, the cycle experienced fluctuations in the subsequent quarters but generally maintained a range between roughly 162 and 182 days until early 2022. This period was characterized by relative stability with minor variations, reflecting manageable inventory and receivables management.
From the second quarter of 2022 onwards, a notable upward trend emerged, with the CCC rising sharply. By September 30, 2022, it had increased to approximately 213 days, and it continued to extend over the following quarters. Notably, by December 31, 2023, the CCC reached approximately 252 days, reflecting nearly an additional three months compared to the initial 2020 figures. The trend persisted into 2024 and 2025, with the CCC fluctuating slightly but remaining elevated around 220-240 days, reaching up to approximately 234 days in June 2025.
This prolonged increase in the CCC indicates that Lam Research's working capital management has become less efficient, with extended periods for inventory turnover and receivables collection. Such a trend may suggest changes in cash flow strategies, shifts in customer payment terms, inventory accumulation, or supply chain factors impacting operational efficiency. The marked long-term increase in CCC warrants further investigation to understand underlying causes and potential implications for liquidity and operational performance.