Stock Analysis on Net
Stock Analysis on Net

KLA Corp. (NASDAQ:KLAC)

$24.99

Analysis of Liquidity Ratios

Microsoft Excel

Liquidity ratios measure the company ability to meet its short-term obligations.

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Liquidity Ratios (Summary)

KLA Corp., liquidity ratios

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
Current ratio
Quick ratio
Cash ratio

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

Current Ratio
The current ratio demonstrates a general declining trend over the observed period. Starting at 2.44 in 2019, it increased to a peak of 2.78 in 2020, followed by a slight decrease to 2.71 in 2021. From 2022 onward, there is a consistent decrease each year, reaching 2.15 in 2024. This indicates a gradual reduction in the company's short-term liquidity, though it remains above 2.0, suggesting still a strong ability to cover current liabilities with current assets.
Quick Ratio
The quick ratio follows a pattern similar to the current ratio in the initial years, increasing from 1.54 in 2019 to 1.82 in 2020, then remaining relatively stable at 1.81 in 2021. However, starting in 2022, the quick ratio declines to 1.57 and continues downward, reaching 1.33 in 2023. It shows a minor rebound to 1.36 in 2024. This trend suggests a decreasing but still adequate level of near-cash assets relative to current liabilities, with some improvement in the most recent period.
Cash Ratio
The cash ratio exhibits fluctuations but an overall declining tendency from 2019 to 2024. Initially, it rises from 0.98 in 2019 to a high of 1.19 in 2021, indicating a strong cash position. Then it declines notably to 0.94 in 2022 and reaches its lowest point of 0.87 in 2023 before slightly recovering to 0.97 in 2024. Despite the decrease, the cash ratio remains close to 1.0, reflecting a solid liquidity position in terms of cash and cash equivalents relative to current liabilities.
Summary
Overall, the liquidity ratios reveal a generally decreasing trend in the company’s liquidity over the six-year period after peaking around 2020 and 2021. While the current and quick ratios show a gradual decline, the cash ratio indicates some volatility but maintains a relatively strong position. The modest recent improvements in the quick and cash ratios may suggest efforts to stabilize liquidity. However, the downward trends warrant attention to ensure sustained short-term financial health.

Current Ratio

KLA Corp., current ratio calculation, comparison to benchmarks

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
Selected Financial Data (US$ in thousands)
Current assets
Current liabilities
Liquidity Ratio
Current ratio1
Benchmarks
Current Ratio, Competitors2
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
Lam Research Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Current Ratio, Sector
Semiconductors & Semiconductor Equipment
Current Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Click competitor name to see calculations.

Current Assets
Current assets have shown a consistent upward trend from 2019 to 2024. The value increased from approximately 4.32 billion US dollars in 2019 to over 10 billion US dollars in 2024. This represents more than a doubling of current assets within the six-year period, indicative of growing liquidity and potentially expanding operational capacity.
Current Liabilities
Current liabilities also increased steadily over the same period, rising from about 1.77 billion US dollars in 2019 to roughly 4.66 billion US dollars in 2024. This growth in obligations nearly triples the amount within six years, showing increased short-term financial commitments.
Current Ratio
The current ratio, a key liquidity metric, displays a declining trend despite the increase in current assets. It decreased from 2.44 in 2019 to 2.15 in 2024. While the ratio remains above 2.0, indicating the company continues to maintain more than twice the current assets compared to current liabilities, the downward slope suggests that liability growth is outpacing asset growth to some extent over the period.
Overall Analysis
The data reveals substantial growth in both current assets and current liabilities, with assets growing at a slightly slower rate as inferred from the declining current ratio. This could imply increasing operational scale or investment, accompanied by a rise in short-term debts or obligations. While liquidity remains strong, the decreasing current ratio warrants monitoring to ensure the balance between assets and liabilities does not adversely affect the company’s ability to meet short-term obligations in the future.

Quick Ratio

KLA Corp., quick ratio calculation, comparison to benchmarks

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
Selected Financial Data (US$ in thousands)
Cash and cash equivalents
Marketable securities
Accounts receivable, net
Total quick assets
 
Current liabilities
Liquidity Ratio
Quick ratio1
Benchmarks
Quick Ratio, Competitors2
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
Lam Research Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Quick Ratio, Sector
Semiconductors & Semiconductor Equipment
Quick Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =

2 Click competitor name to see calculations.

Trend in Total Quick Assets
Total quick assets exhibited a consistent upward trend over the examined period. Starting from approximately $2.73 billion in mid-2019, the value increased steadily each year, reaching about $6.34 billion by mid-2024. This more than doubling of quick assets over the five-year span reflects a strengthening in highly liquid assets.
Trend in Current Liabilities
Current liabilities also increased significantly over the same period, rising from around $1.77 billion in mid-2019 to approximately $4.66 billion in mid-2024. The growth in liabilities was marked, with the largest annual increases occurring in the latter years, suggesting an expansion in short-term obligations or operational scale.
Quick Ratio Analysis
The quick ratio presented a more variable trend. It started at 1.54 in mid-2019, improved to a peak of 1.82 in mid-2020, and maintained a similar level at 1.81 in mid-2021. However, from mid-2022 onwards, the ratio declined to 1.57, then further to 1.33 in mid-2023, before a slight improvement to 1.36 in mid-2024. Despite the rise in quick assets, the quick ratio decreased in the last three years, indicating that current liabilities grew at a faster rate than quick assets in that period.
Overall Interpretation
The increasing total quick assets and current liabilities suggest growth in both liquid asset holdings and short-term financial obligations. The quick ratio's downward drift after 2021 implies a moderate reduction in short-term liquidity coverage, but maintaining a ratio above 1.3 indicates that the firm continues to have more quick assets than current liabilities. This points to a manageable liquidity position despite increased obligations.

Cash Ratio

KLA Corp., cash ratio calculation, comparison to benchmarks

Microsoft Excel
Jun 30, 2024 Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019
Selected Financial Data (US$ in thousands)
Cash and cash equivalents
Marketable securities
Total cash assets
 
Current liabilities
Liquidity Ratio
Cash ratio1
Benchmarks
Cash Ratio, Competitors2
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
Lam Research Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Cash Ratio, Sector
Semiconductors & Semiconductor Equipment
Cash Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).

1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =

2 Click competitor name to see calculations.

Total Cash Assets
The total cash assets exhibited a consistent upward trend over the six-year period. Beginning at approximately 1.74 billion USD in June 2019, the value increased steadily each year, reaching about 4.50 billion USD by June 2024. This reflects a substantial growth in liquidity, with the total cash assets more than doubling within the timeframe analyzed.
Current Liabilities
Current liabilities also showed an increasing pattern throughout the period. Starting from roughly 1.77 billion USD in June 2019, there was a gradual rise each year, accelerating notably after June 2020. By June 2024, current liabilities reached approximately 4.66 billion USD. The rate of increase in liabilities exceeded that of cash assets, especially in the later years.
Cash Ratio
The cash ratio, which measures the company's ability to cover its current liabilities with its most liquid assets, fluctuated over the years. It began just below parity at 0.98 in June 2019 and improved to a peak of 1.19 in June 2021, indicating that cash and cash equivalents exceeded current liabilities in that year. However, the ratio declined to a low of 0.87 by June 2023, suggesting a period where liquid assets were insufficient to fully cover current liabilities. By June 2024, the cash ratio partially recovered to 0.97, approaching but not reaching the ideal ratio of 1.0.
Overall Insights
While total cash assets increased significantly, the concurrent rise in current liabilities outpaced the growth in liquid assets in recent years. The fluctuation and recent dip in the cash ratio below 1.0 indicate tightening liquidity and potential challenges in meeting short-term obligations solely through cash. Despite a slight improvement in the latest period, the ratio suggests a need for continued monitoring of liquidity management practices going forward.