KLA Corp. (NASDAQ:KLAC)

The liquidity position, as indicated by the current, quick, and cash ratios, demonstrates a generally decreasing trend over the observed period, followed by a stabilization and then a modest improvement in the most recent quarters. Initial values are relatively strong, but a gradual decline is evident through the first half of 2023. A subsequent recovery begins in late 2023 and continues into the first half of 2025.

Current Ratio

The current ratio begins at 2.72 and generally decreases to a low of 1.91 in December 2023. A consistent upward trend is then observed, reaching 2.83 by June 2025. This suggests an initial weakening in the company’s ability to cover short-term liabilities with short-term assets, followed by a strengthening of this position. Fluctuations occur, but the overall trajectory is positive in the latter portion of the period.

Quick Ratio

The quick ratio mirrors the trend of the current ratio, starting at 1.76 and declining to 1.13 in December 2023. Similar to the current ratio, the quick ratio then increases, reaching 1.83 by June 2025. The decline indicates a decreasing ability to meet short-term obligations with the most liquid assets. The subsequent increase suggests improved liquidity and a stronger capacity to cover immediate liabilities without relying on inventory sales.

Cash Ratio

The cash ratio exhibits a similar pattern, beginning at 1.17 and decreasing to a low of 0.73 in December 2023. A recovery is then observed, with the ratio rising to 1.31 by June 2025. This indicates a reduction in the proportion of current assets held as cash, followed by a rebuilding of the cash position. The cash ratio’s movement is more pronounced than the other two ratios, suggesting a greater degree of active cash management or a more significant impact from changes in short-term obligations.

The concurrent declines in all three ratios through December 2023 suggest a potential increase in short-term liabilities, a decrease in liquid assets, or a combination of both. The subsequent improvements across all ratios indicate a positive shift in the company’s short-term financial health, potentially due to increased cash generation, reduced short-term obligations, or a more conservative approach to working capital management.

The current ratio for the analyzed period demonstrates fluctuations, generally trending downwards from 2020 through 2023, before exhibiting a recovery towards the end of the observed timeframe. Initial values indicate a relatively strong liquidity position, which subsequently experiences periods of decline and stabilization.

Overall Trend

From September 2020 to December 2023, the current ratio generally decreased. Starting at 2.72, it experienced a decline to 1.91. However, from December 2023 through December 2025, the ratio shows a consistent upward trend, reaching 2.83.

Initial Period (2020-2021)

The current ratio remained relatively stable between 2.59 and 2.72 during this period, indicating a consistent ability to cover short-term liabilities with short-term assets. A slight dip is observed in December 2020, followed by a recovery in subsequent quarters.

Decline (2021-2023)

A noticeable decline began in September 2021, falling from 2.44 to 2.33 by March 2022. This downward trend continued, reaching a low of 1.91 in December 2023. This suggests a potential weakening in the company’s short-term liquidity position during this timeframe, possibly due to increases in current liabilities or decreases in current assets.

Recovery (2024-2025)

Starting in March 2024, the current ratio began to recover, increasing from 2.14 to 2.83 by December 2025. This improvement indicates a strengthening of the company’s short-term liquidity, potentially driven by increased current assets or reduced current liabilities. The most significant increase occurred between September 2025 and December 2025.

Quarterly Volatility

While the overall trend is discernible, quarterly fluctuations are present. For example, a rise is observed from June 2022 (2.50) to September 2022 (2.43), followed by a decrease to 2.34 in December 2022. These fluctuations suggest that short-term liquidity is subject to seasonal or cyclical influences.

In conclusion, the current ratio experienced a period of decline followed by a recovery. The recent upward trend suggests improved short-term liquidity, but continued monitoring is recommended to assess the sustainability of this improvement.

The quick ratio for the analyzed period demonstrates fluctuations, generally exhibiting a decreasing trend followed by a recent stabilization and slight increase. Initially strong, the ratio experienced a decline before showing signs of recovery towards the end of the observed timeframe.

Initial Period (Sep 30, 2020 – Jun 30, 2021)

The quick ratio began at 1.76 and peaked at 1.81. This indicates a consistently strong ability to meet short-term obligations with highly liquid assets. A slight increase is observed from September 2020 to June 2021, suggesting improving liquidity during this period.

Subsequent Decline (Sep 30, 2021 – Jun 30, 2023)

From September 2021, a noticeable downward trend emerges. The quick ratio decreased from 1.62 to 1.33. This decline suggests a weakening in the company’s ability to cover its immediate liabilities with quick assets, potentially due to increases in current liabilities or decreases in quick assets, or a combination of both. The most significant drop occurred between December 2022 and June 2023.

Stabilization and Recovery (Sep 30, 2023 – Jun 30, 2025)

Starting in September 2023, the quick ratio appears to stabilize and begin a recovery. It increased from 1.30 to 1.83 by June 2025. This improvement suggests successful strategies to bolster liquidity, potentially through improved asset management or liability reduction. The ratio reached its highest point in the analyzed period at the end of the timeframe.

Total Quick Assets and Current Liabilities

The increase in the quick ratio from September 2023 onward correlates with a larger increase in total quick assets compared to the increase in current liabilities. While both increased, the growth in quick assets outpaced that of current liabilities, driving the ratio higher. Prior to this, the increase in current liabilities generally exceeded the growth in quick assets, contributing to the earlier decline.

Overall, the quick ratio indicates a company that maintained strong liquidity initially, experienced a period of weakening short-term solvency, and subsequently demonstrated a recovery in its ability to meet immediate obligations. The recent trend suggests improved financial health regarding short-term liquidity.

The cash ratio for the analyzed period demonstrates fluctuations, generally trending downwards from late 2020 through late 2023 before exhibiting a recovery. Initial values indicate a relatively strong immediate liquidity position, which subsequently experienced a period of moderate decline, followed by improvement in the most recent quarters.

Overall Trend

From September 30, 2020, to December 31, 2023, the cash ratio generally decreased from 1.17 to 0.73. This suggests a weakening in the company’s ability to cover its current liabilities solely with cash and cash equivalents. However, beginning in March 31, 2024, the ratio began to increase, reaching 1.31 by December 31, 2025, indicating a strengthening liquidity position.

Initial Period (Sep 30, 2020 – Dec 31, 2021)

The cash ratio remained above 1.0 throughout this period, ranging from 1.17 to 1.01. This indicates that the company held more cash and cash equivalents than its current liabilities, suggesting a comfortable short-term liquidity position. A slight decrease is observed, but the ratio remained healthy.

Period of Decline (Mar 31, 2022 – Dec 31, 2023)

A more pronounced downward trend is evident during this timeframe. The cash ratio decreased from 0.91 to 0.73. This decline could be attributed to an increase in current liabilities outpacing the growth of total cash assets, or a deliberate strategy to deploy cash into other investments or operational activities. The lowest point of 0.73 in December 2023 represents the weakest liquidity position observed during the analyzed period.

Recovery Phase (Mar 31, 2024 – Dec 31, 2025)

The cash ratio experienced a significant recovery, increasing from 0.96 to 1.31. This improvement suggests successful strategies to bolster liquidity, potentially through increased cash generation, reduced current liabilities, or a combination of both. The ratio consistently exceeded 1.0 during this period, indicating a strong ability to meet short-term obligations with available cash.

Volatility

While a general trend can be identified, the cash ratio exhibits some quarterly volatility. For example, a slight increase is seen from June 30, 2022 (0.94) to September 30, 2022 (0.94), followed by a decrease to 0.82 in December 2022. This suggests that short-term fluctuations in cash flows and current liabilities can impact the ratio.

In conclusion, the company’s cash ratio demonstrates a cyclical pattern of decline followed by recovery. While a period of weakening liquidity was observed, recent trends indicate a strengthening position, with the ratio reaching its highest point in the analyzed period by the end of 2025.