Stock Analysis on Net
Stock Analysis on Net

Lam Research Corp. (NASDAQ:LRCX)

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Financial Reporting Quality: Aggregate Accruals

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.

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Balance-Sheet-Based Accruals Ratio

Lam Research Corp., balance sheet computation of aggregate accruals

US$ in thousands

Microsoft Excel
Jun 29, 2025 Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020
Operating Assets
Total assets
Less: Cash and cash equivalents
Operating assets
Operating Liabilities
Total liabilities
Less: Current portion of long-term debt and finance lease obligations
Less: Long-term debt and finance lease obligations, less current portion
Operating liabilities
 
Net operating assets1
Balance-sheet-based aggregate accruals2
Financial Ratio
Balance-sheet-based accruals ratio3
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
KLA Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Balance-Sheet-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment
Balance-Sheet-Based Accruals Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28).

1 2025 Calculation
Net operating assets = Operating assets – Operating liabilities
= – =

2 2025 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2025 – Net operating assets2024
= – =

3 2025 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =

4 Click competitor name to see calculations.

Net Operating Assets
The net operating assets show an overall increasing trend over the five-year period. Starting at approximately 6.61 million US dollars in June 2021, the figure rises steadily to about 7.95 million US dollars by June 2025. This indicates consistent growth in operating assets, although there is a slight decline observed between June 2023 and June 2024, from around 7.88 million to 7.67 million US dollars, before increasing again in the following year.
Balance-sheet-based Aggregate Accruals
Aggregate accruals exhibit significant fluctuations throughout the period. Initially, the value is about 0.53 million US dollars in June 2021, followed by a sharp increase to approximately 1.15 million US dollars in June 2022. Subsequently, a steep decrease occurs in June 2023, bringing the value down to roughly 0.12 million US dollars. A marked negative value of approximately -0.21 million US dollars is recorded in June 2024, indicating a reversal or reduction in accruals. The balance recovers somewhat in June 2025, reaching around 0.28 million US dollars. These large variations suggest volatility in accrual accounting components during the analyzed timeframe.
Balance-sheet-based Accruals Ratio
The accruals ratio shows a pattern consistent with the aggregate accruals but expressed in percentage terms relative to net operating assets. It starts at 8.38% in June 2021, nearly doubling to 16.02% in June 2022. The ratio then dramatically declines to 1.57% in June 2023, followed by a negative ratio of -2.7% in June 2024, indicating that accruals have become negative relative to net operating assets in that year. By June 2025, the ratio returns to a positive 3.59%. This trend underscores a high level of variability in the extent to which accruals contribute to the financial position, reflecting potential changes in earnings quality or accounting practices across these years.

Cash-Flow-Statement-Based Accruals Ratio

Lam Research Corp., cash flow statement computation of aggregate accruals

US$ in thousands

Microsoft Excel
Jun 29, 2025 Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020
Net income
Less: Net cash provided by operating activities
Less: Net cash (used for) provided by investing activities
Cash-flow-statement-based aggregate accruals
Financial Ratio
Cash-flow-statement-based accruals ratio1
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Advanced Micro Devices Inc.
Analog Devices Inc.
Applied Materials Inc.
Broadcom Inc.
Intel Corp.
KLA Corp.
Micron Technology Inc.
NVIDIA Corp.
Qualcomm Inc.
Texas Instruments Inc.
Cash-Flow-Statement-Based Accruals Ratio, Sector
Semiconductors & Semiconductor Equipment
Cash-Flow-Statement-Based Accruals Ratio, Industry
Information Technology

Based on: 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28).

1 2025 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × ÷ [( + ) ÷ 2] =

2 Click competitor name to see calculations.

Net Operating Assets
The net operating assets showed an overall increasing trend over the five-year period. Starting at approximately 6.61 billion US dollars in June 2021, the value rose steadily each year to reach nearly 7.95 billion US dollars by June 2025. The growth was particularly notable between 2021 and 2022, with an increase of over 1.15 billion US dollars, followed by smaller increments in subsequent years. A slight decline occurred in June 2024 compared to the previous year, but the figure recovered again by June 2025.
Cash-Flow-Statement-Based Aggregate Accruals
The aggregate accruals values exhibited considerable volatility during the period. In June 2021, the accruals were positive at 247 million US dollars, rising sharply to an elevated figure of approximately 893 million US dollars in June 2022. Following this peak, a significant reversal occurred with negative accruals recorded for the subsequent three years, reaching a low of around -454 million US dollars in June 2024. By June 2025, the value remained negative but showed some improvement, increasing to approximately -107 million US dollars.
Cash-Flow-Statement-Based Accruals Ratio
The accruals ratio, expressed as a percentage of net operating assets, followed a similar pattern to the aggregate accruals. It started at 3.89% in June 2021 and rose sharply to 12.43% in June 2022, indicating a substantial increase in accruals relative to net assets. Afterward, the ratio turned negative, with the lowest point at -5.83% in June 2024. By June 2025, the ratio improved but remained negative at -1.37%. This shift from positive to negative values suggests a notable change in the composition or recognition of accruals relative to operating assets across the years.