KLA Corp. (NASDAQ:KLAC)

Inventory Turnover

The inventory turnover ratio demonstrates a declining trend from 1.87 in 2020 to 1.29 in 2024, indicating a reduction in the efficiency with which inventory is sold and replaced over time. However, a slight recovery is observed in 2025, with the ratio increasing to 1.48.

Receivables Turnover

This ratio remains relatively stable throughout the period, fluctuating mildly around 5.2 to 5.37. Notably, there is a peak at 5.99 in 2023, suggesting an improvement in the efficiency of collecting receivables during that year before returning to prior levels.

Payables Turnover

The payables turnover exhibits volatility, declining from 9.27 in 2020 to 8.1 in both 2021 and 2022, followed by a significant increase to 11.37 in 2023. Thereafter, it decreases gradually to 10.93 in 2024 and to 10.36 in 2025, indicating changes in payment practices with suppliers.

Working Capital Turnover

An improving trend is observed from 1.92 in 2020 to 2.27 in 2023, reflecting enhanced efficiency in utilizing working capital to generate revenues. This is followed by a decrease to 1.83 in 2024 and a marginal increase to 1.84 in 2025, suggesting some challenges or shifts in working capital management in the latter years.

Average Inventory Processing Period

The average inventory days increase steadily from 195 days in 2020 to 282 days in 2024, indicating a longer time to process inventory. In 2025, this period decreases to 247 days, which may signal efforts to improve inventory turnover or adjustments in inventory policies.

Average Receivable Collection Period

This metric remains relatively stable, fluctuating between 61 and 72 days, with the shortest collection period recorded in 2023 (61 days). The subsequent years see a return to approximately 68 days, indicating consistency in receivables management with minor variations.

Operating Cycle

The operating cycle lengthens progressively from 265 days in 2020 to 350 days in 2024, reflecting extended durations in converting inventory and receivables into cash. It then shortens to 315 days in 2025, suggesting some improvement in operational efficiency or collection processes.

Average Payables Payment Period

Payables payment period increases from 39 days in 2020 to 45 days in 2021 and 2022, indicating longer payment terms with suppliers initially. A sharp reduction to 32 days occurs in 2023, with a slight increase to 33 and 35 days in 2024 and 2025, respectively, implying tighter payment schedules or changes in supplier relations.

Cash Conversion Cycle

The cash conversion cycle demonstrates a rising trend from 226 days in 2020 to 317 days in 2024, indicating a lengthening of the time between outlay of cash and cash recovery. This is followed by a reduction to 280 days in 2025, suggesting an improvement in overall liquidity management or operational efficiencies.

Costs of Revenues

The costs of revenues exhibited a general upward trend over the analyzed periods. Starting from approximately $2.45 billion in mid-2020, these costs increased steadily each year, peaking around $4.75 billion by mid-2025. Although there was a slight decrease between mid-2023 and mid-2024, the overall trajectory indicates growing expenses related to the production or acquisition of goods sold by the company.

Inventories

Inventory levels followed a consistent upward movement from mid-2020 to mid-2025. The inventory value rose from about $1.31 billion in mid-2020 to over $3.21 billion by mid-2025. This substantial increase suggests an expansion in stock holdings, which could be indicative of higher demand expectations, increased production capacity, or potential overstocking.

Inventory Turnover Ratio

The inventory turnover ratio demonstrated a declining trend from 1.87 in mid-2020 down to 1.29 in mid-2024, followed by a slight recovery to 1.48 in mid-2025. This ratio indicates the efficiency with which inventory is sold and replaced. The initial decline may point to slower inventory movement or accumulation of stock relative to sales, while the modest rebound in 2025 suggests some improvement in inventory management or sales velocity.

The financial data exhibits several notable trends over the six-year period.

Revenues

Revenues have generally shown an upward trajectory from 2020 to 2025. Starting at approximately $5.81 billion in 2020, revenues increased to a peak of about $10.5 billion by mid-2023. There was then a slight decline in 2024 to roughly $9.81 billion, followed by a recovery and new peak at about $12.16 billion in 2025. Overall, this indicates strong revenue growth with some minor volatility in the mid-term.

Accounts Receivable, Net

The net accounts receivable balance has steadily increased over the entire period, rising from about $1.11 billion in 2020 to $2.26 billion by 2025. This growth is generally consistent with the revenue increase, though the increase in receivables slightly outpaces revenue growth in some years, suggesting possibly extended credit terms or slower collections at times.

Receivables Turnover Ratio

The receivables turnover ratio fluctuated modestly but remained within a narrow range. It started at 5.24 times in 2020, peaked near 6.0 times in mid-2023, and settled around 5.37 times by 2025. This indicates a generally stable efficiency in collecting receivables, with a temporary improvement in collection speed around 2023 followed by a slight reduction to prior levels.

In summary, there is clear evidence of sustained revenue growth accompanied by increasing accounts receivable balances. The stable receivables turnover ratio suggests that while the volume of receivables is growing, the company is maintaining a consistent collection cycle throughout the years analyzed.

The financial data reveals notable trends in costs of revenues, accounts payable, and payables turnover over a six-year period.

Costs of Revenues

There is a consistent upward trend in the costs of revenues from June 30, 2020, to June 30, 2025. The amount increased from approximately $2.45 billion in 2020 to about $4.75 billion in 2025. This represents nearly a doubling in costs over five years, with some fluctuations such as a slight decrease in 2024 compared to 2023. Overall, the trajectory indicates expanding operational scale or increasing expense pressures related to revenue generation.

Accounts Payable

Accounts payable also exhibits growth during the period, rising from about $264 million in 2020 to around $459 million in 2025. However, the trend is less consistent, with a peak in 2022 at $443 million, followed by a dip in the subsequent two years, before rising again in 2025 to the highest recorded value. This volatility could suggest changes in supplier payment policies, credit terms, or operational cycle effects.

Payables Turnover Ratio

The payables turnover ratio saw a downward movement from 9.27 in 2020 to 8.1 in both 2021 and 2022, indicating a slower rate of paying off suppliers initially. Subsequently, there was a marked increase to 11.37 in 2023, followed by slight declines to 10.93 in 2024 and 10.36 in 2025. This pattern suggests an initial extension of payables duration or slower payments, then a tightening or acceleration in payments starting in 2023, which is partly sustained in the following years.

In summary, costs of revenues have generally increased significantly, reflecting rising expenditures. Accounts payable have grown overall but with some irregularities, while the fluctuations in payables turnover ratio imply changes in payment behavior and possibly working capital management strategies over time.

Working Capital

Working capital shows a consistent upward trend over the six-year period. It increased from approximately 3.02 billion US dollars in mid-2020 to about 6.61 billion US dollars by mid-2025, indicating a more than doubling of this metric. This suggests an improvement in the company’s short-term financial health and liquidity position.

Revenues

Revenues generally increased from 5.81 billion US dollars in mid-2020 to an estimated 12.16 billion US dollars in mid-2025. However, there was a fluctuation in 2024 with a decline from 10.50 billion in 2023 to 9.81 billion, before rebounding in 2025. The overall trend indicates strong growth in sales, except for the temporary dip in 2024.

Working Capital Turnover Ratio

The working capital turnover ratio exhibited a rising trend from 1.92 in 2020 to a peak of 2.27 in 2023, indicating that the company was generating more revenue per unit of working capital during this period. However, the ratio declined significantly to 1.83 in 2024 and marginally increased to 1.84 in 2025. This decline indicates a reduction in operational efficiency in utilizing working capital to generate sales during the last two years.

Overall Insights

The company has demonstrated solid growth in both working capital and revenues over the six years. The initial increase in the working capital turnover ratio reflects improved efficiency, but the recent downward trend suggests potential challenges in optimizing working capital usage amidst fluctuating revenue. The decline in revenue in 2024, coupled with reduced turnover, may warrant further analysis to identify underlying causes. Nevertheless, the strong recovery in revenue and sustained increase in working capital by 2025 indicate positive momentum moving forward.

Inventory Turnover

The inventory turnover ratio demonstrates a declining trend from June 30, 2020, through June 30, 2024, decreasing from 1.87 to 1.29. This indicates a progressive slowdown in the rate at which inventory is sold and replaced during this period. However, there is a slight recovery observed in June 30, 2025, when the ratio rises to 1.48.

Average Inventory Processing Period

The average inventory processing period, measured in days, exhibits a consistent increase from 195 days in June 2020 to a peak of 282 days in June 2024. This denotes an increasing length of time required to process inventory over the years. In June 2025, this period declines to 247 days, indicating an improvement in inventory turnover speed, although it remains longer than earlier years.

Overall Analysis

The data reveals an inverse relationship between the inventory turnover ratio and the average inventory processing period, as expected. The lengthening of the inventory processing period corresponds with the declining turnover ratio until 2024, suggesting potential challenges in inventory management or sales velocity during that time. The partial recovery in 2025 implies some corrective measures or operational efficiencies may have been implemented to enhance inventory movement.

The analysis of the receivables turnover ratio and the average receivable collection period over the presented periods reveals notable fluctuations and trends.

Receivables Turnover Ratio

The receivables turnover ratio exhibited modest variability from 2020 through 2025. It began at 5.24 in 2020 and slightly increased to 5.3 in 2021, indicating a marginal improvement in the efficiency of collecting receivables. However, in 2022, the ratio declined to 5.08, suggesting a decrease in collection efficiency that year. There was a substantial improvement in 2023, as the ratio rose to 5.99, the highest in the observed period, which reflects accelerated conversion of receivables into cash. Subsequent years saw a slight decrease and stabilization with ratios of 5.35 in 2024 and 5.37 in 2025, indicating a return to a moderate efficiency level in receivables management.

Average Receivable Collection Period (in days)

The average collection period complements the turnover ratio trends, with somewhat inverse movements. It started at 70 days in 2020 and decreased to 69 days in 2021, indicating a slight improvement in collections speed. In 2022, the period extended to 72 days, consistent with the decrease in turnover ratio that year, suggesting slower collections. The collection period notably improved in 2023 to 61 days, aligning with the highest turnover ratio recorded, reflecting enhanced working capital efficiency. In 2024 and 2025, the period increased to 68 days and remained stable, consistent with the moderate turnover ratios, indicating a slight easing in collection speed.

Overall, the data depicts an oscillating pattern in the management of receivables, with an apparent peak in operational efficiency in 2023. The fluctuations suggest adjustments in credit policies or customer payment behaviors impacting collection dynamics. The stabilization in the last two periods points to a possible establishment of more consistent receivables management practices.

Inventory Processing Period

The average inventory processing period exhibited a steady increase from 195 days in 2020 to a peak of 282 days in 2024, signaling a lengthening time inventory remains before sale. In 2025, this metric decreased to 247 days, indicating some improvement or adjustment in inventory turnover efficiency.

Receivable Collection Period

The average receivable collection period remained relatively stable throughout the observed period, fluctuating slightly between 61 and 72 days. It started at 70 days in 2020, dipped to 61 days in 2023, and then held steady at 68 days for 2024 and 2025. This stability suggests consistent credit management practices.

Operating Cycle

The operating cycle lengthened consistently from 265 days in 2020 to 350 days in 2024, reflecting the combined effect of increasing inventory processing days and relatively stable receivable collection days. In 2025, the operating cycle shortened to 315 days, indicating overall improvements in operational efficiency.

Payables Turnover

The payables turnover ratio demonstrates some variability over the reported periods. From June 2020 to June 2021, there is a notable decline from 9.27 to 8.1, where it remains steady through June 2022. A significant increase occurs by June 2023, rising sharply to 11.37, followed by a slight decline in the subsequent years to 10.93 and 10.36 respectively. This suggests that the company initially slowed its payment rate to suppliers but improved its efficiency in accounts payable management from mid-2022 onward, albeit with a marginal decrease in turnover in the most recent periods.

Average Payables Payment Period

The average payables payment period inversely reflects the changes seen in the payables turnover ratio. Starting at 39 days in 2020, the payment period lengthens to 45 days in both 2021 and 2022, indicating a slower payment process during this time. A sharp reduction occurs by June 2023, with the payment period dropping to 32 days, which aligns with the increase in payables turnover. Subsequently, there is a modest increase to 33 days and then 35 days over the next two years, indicating a slight extension in payment terms or slower payments, though still shorter than the peak period in 2021-2022.

Overall Analysis

Collectively, the data indicates a strategic shift around 2023 to accelerate payments to suppliers, as reflected by the increase in payables turnover and the corresponding decrease in the average payment period. This trend could be indicative of strengthened liquidity or a change in payment policy. The moderate reversal observed in the last two years, with a slight decrease in turnover and increase in days payable, may suggest a balancing act between maintaining supplier relationships and managing cash flow effectively. The fluctuations over the timeline reflect dynamic working capital management responding to internal or external influences.

Inventory Processing Period

The average inventory processing period shows a general upward trend from 195 days in 2020 to a peak of 282 days in 2024, indicating an increasing duration for inventory turnover. However, there is a decrease to 247 days in 2025, suggesting some improvement in inventory management or sales efficiency in the most recent year.

Receivable Collection Period

The average receivable collection period remains relatively stable over the years, fluctuating mildly between 61 and 72 days. It declined to 61 days in 2023, reflecting more efficient receivables collection during that period, but rose again to 68 days in 2024 and plateaued at 68 days in 2025, indicating a slight lengthening in collection time compared to the low point in 2023.

Payables Payment Period

The average payables payment period exhibits variability, increasing from 39 days in 2020 to 45 days in both 2021 and 2022, indicating a longer duration to settle payables. This period then contracts to 32 days in 2023, before slightly increasing again to 33 days in 2024 and 35 days in 2025, suggesting a trend towards quicker payment to suppliers after the peak years.

Cash Conversion Cycle

The cash conversion cycle shows a consistent upward trajectory from 226 days in 2020, reaching a maximum of 317 days in 2024. This trend reflects an elongation in the net time taken to convert investments in inventory and receivables back into cash. The slight reduction to 280 days in 2025 points to recent improvements in working capital management, though the cycle remains elevated compared to initial years.