Lam Research Corp (LRCX)
Solvency ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.24 | 0.26 | 0.29 | 0.31 | 0.34 |
| Debt-to-capital ratio | 0.34 | 0.38 | 0.44 | 0.45 | 0.49 |
| Debt-to-equity ratio | 0.52 | 0.60 | 0.79 | 0.82 | 0.96 |
| Financial leverage ratio | 2.20 | 2.29 | 2.74 | 2.64 | 2.81 |
Analysis of Solvency Ratios for Lam Research Corp:
1. Debt-to-Assets Ratio:
The debt-to-assets ratio for Lam Research Corp has shown a decreasing trend over the past five years, indicating an improvement in the company's ability to cover its assets with debt. As of June 30, 2024, the ratio stands at 0.24, implying that only 24% of the company's assets are financed by debt, leaving a significant portion covered by equity.
2. Debt-to-Capital Ratio:
Similarly, the debt-to-capital ratio has also shown a decreasing trend, reflecting a more favorable capital structure for Lam Research Corp. As of June 30, 2024, the ratio stands at 0.34, indicating that 34% of the company's capital is sourced from debt, while the remaining 66% is funded through equity.
3. Debt-to-Equity Ratio:
The debt-to-equity ratio for Lam Research Corp has decreased steadily over the years, implying a lower reliance on debt as a source of financing for the company. As of June 30, 2024, the ratio is at 0.52, indicating that for every dollar of equity, the company has 52 cents of debt.
4. Financial Leverage Ratio:
The financial leverage ratio is a measure of the company's financial risk and shows the extent to which the company uses debt to finance its assets. The decreasing trend in the financial leverage ratio for Lam Research Corp suggests a more conservative approach to debt utilization. As of June 30, 2024, the ratio stands at 2.20, indicating that the company's assets are financed more than twice by equity compared to debt.
Overall, the solvency ratios for Lam Research Corp demonstrate a positive trend, with decreasing levels of debt relative to assets, capital, and equity, indicating an improved financial position and lower financial risk for the company.
Coverage ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 23.30 | 28.40 | 29.11 | 21.95 | 15.51 |
Lam Research Corp has exhibited a generally strong interest coverage ratio over the past five years. The interest coverage ratio measures the company's ability to pay interest expenses on its outstanding debt using its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.
In this case, the interest coverage ratio for Lam Research Corp has been consistently above 15 for the past five years, with values ranging from 15.51 to 29.11. The trend indicates a relatively stable and healthy financial position, as the company generated operating income well in excess of its interest expenses each year.
The highest interest coverage ratio was observed in 2022, at 29.11, suggesting a significant buffer between the company's operating income and its interest payments. However, even the lowest ratio of 15.51 in 2020 indicates a comfortable margin of safety in meeting interest obligations.
Overall, Lam Research Corp's interest coverage ratio reflects a sound financial management strategy, indicating the company's ability to meet its interest payments with ease and potentially signaling financial stability to investors and creditors.