Lam Research Corp. (NASDAQ:LRCX)

Current Ratio

The current ratio exhibits a generally declining trend from 3.61 in mid-2019 to a low of 2.69 in mid-2022, indicating a reduction in short-term liquidity. There is a moderate recovery in subsequent years, with the ratio rising to 3.16 in mid-2023 before slightly decreasing again to 2.97 in mid-2024. Overall, the current ratio remains above 2.5, suggesting the company maintains a relatively strong ability to cover its current liabilities with current assets despite some volatility.

Quick Ratio

The quick ratio follows a similar downward trend, beginning at 2.16 in mid-2019. It increases marginally to 2.22 in mid-2020 but then decreases steadily to 1.72 by mid-2022. This indicates a weakening in the company’s immediate liquidity position when inventory is excluded. Partial recovery is seen in mid-2023 and mid-2024, with values of 1.95 and 1.93 respectively, but these remain below initial levels, reflecting a more conservative liquidity buffer compared to prior years.

Cash Ratio

The cash ratio reveals a notable decline from 1.54 in mid-2019 to 0.77 in mid-2022, signaling reduced cash and cash equivalents available relative to current liabilities over this period. Post-2022, the ratio improves to 1.28 in mid-2023 and further to 1.35 in mid-2024, indicating enhanced immediate liquidity and a stronger cash position. Despite the dip, the recovery suggests an effort to rebuild cash reserves after a period of tighter cash availability.

Current Assets

The current assets demonstrate a consistent upward trend from June 30, 2019, reaching a peak on June 25, 2023, at approximately $13.23 billion. However, there is a slight decline in the most recent period ending June 30, 2024, with current assets decreasing to about $12.88 billion. This indicates strong asset growth over the years with a minor contraction in the last period.

Current Liabilities

Current liabilities have generally increased from $2.37 billion in June 2019 to a high of around $4.56 billion in June 2022. Thereafter, a slight reduction occurred in the following two years, settling near $4.34 billion as of June 2024. The data shows a rising trend in obligations, with some recent moderation in liabilities since 2022.

Current Ratio

The current ratio exhibits a declining trend from 3.61 in June 2019 to a low of 2.69 in June 2022, reflecting a decrease in short-term liquidity relative to current liabilities. However, a recovery is observed in the two subsequent years, with the ratio increasing to 3.16 and then slightly decreasing again to 2.97 as of June 2024. Overall, the ratio remains healthy but indicates a moderate reduction in liquidity compared to earlier years.

Summary

The analysis reveals that while current assets have steadily increased over the five-year span with a slight dip recently, current liabilities have also risen significantly, peaking in 2022 before slightly decreasing. The current ratio trend suggests that liquidity has somewhat decreased over time but remains comfortably above a ratio of 1, indicating capability to cover short-term obligations. The recent decreases in both current assets and ratio may warrant attention to maintain sufficient liquidity levels.

The financial data reveals distinct trends in liquidity and short-term financial stability over the observed periods. Total quick assets show a steady increase from June 2019 to June 2024, indicating an enhancement in the company's liquid assets capacity. Specifically, there is consistent growth each year, reflecting an overall strengthening of available quick resources.

Current liabilities also exhibit an upward trend, rising significantly from June 2019 through June 2022, then slightly decreasing in June 2023 before increasing again by June 2024. This pattern suggests the company took on more short-term obligations during the earlier years, with some reduction in liabilities before a renewed increase, which implies a dynamic approach to managing payables or short-term debt.

The quick ratio, which measures the ability to cover current liabilities with quick assets, fluctuates slightly but remains above 1.7 across all periods, demonstrating maintained liquidity. It peaks at 2.22 in June 2020, then declines to its lowest point at 1.72 in June 2022, followed by a recovery to around 1.93 by June 2024. This indicates the company experienced the highest liquidity position in 2020, faced a relative decrease by 2022, and then strengthened liquidity again towards 2024, though not to the peak levels seen earlier.

Total Quick Assets

Increased steadily from approximately $5.1 billion in 2019 to about $8.4 billion in 2024, signifying enhanced liquid asset availability.

Current Liabilities

Rose from roughly $2.37 billion in 2019 to a high of approximately $4.56 billion in 2022, then slightly dropped in 2023 before edging up again in 2024, indicating fluctuating short-term obligations.

Quick Ratio

Varied between 1.72 and 2.22 over six years, showing overall sound liquidity but with some periods of relative weakening and subsequent recovery.

In summary, the company has consistently increased its liquid assets, with current liabilities also rising but managed in a way that maintains a healthy quick ratio. The observed fluctuations in the quick ratio suggest periods of strategic adjustments in liquidity management, reflecting an ability to adapt to changing financial conditions while sustaining adequate short-term financial health.

Total Cash Assets

The total cash assets exhibit fluctuations over the analyzed period. From June 30, 2019, through June 28, 2020, there is a notable increase, rising from approximately 3.66 billion to 4.92 billion US dollars. This is followed by a decline in the subsequent year, June 27, 2021, down to around 4.42 billion. The downward trend continues sharply to about 3.52 billion as of June 26, 2022. However, from that point forward, a significant recovery is observed, peaking at 5.34 billion in June 25, 2023, and slightly increasing again to approximately 5.85 billion by June 30, 2024.

Current Liabilities

Current liabilities consistently increase throughout the period under review. Beginning at 2.37 billion US dollars on June 30, 2019, liabilities rise to 3.16 billion by June 28, 2020. This upward trajectory continues to 3.53 billion in June 27, 2021, then experiences a more pronounced increase to 4.56 billion by June 26, 2022. After a slight decrease to 4.18 billion in June 25, 2023, current liabilities again modestly increase to approximately 4.34 billion by June 30, 2024.

Cash Ratio

The cash ratio demonstrates considerable variability across the reported years. Initially, it remains stable and high, around 1.54 to 1.55 in 2019 and 2020 respectively, indicating strong liquidity. However, the ratio declines to 1.25 by June 27, 2021, followed by a steep fall to 0.77 by June 26, 2022. This drop suggests a reduction in liquid asset coverage relative to current liabilities during that period. Subsequently, the cash ratio recovers to 1.28 in June 25, 2023, and improves further to 1.35 by June 30, 2024, reflecting enhanced liquidity conditions in recent years.

Overall Observations

The data reveal an initial phase of increasing liquidity and cash reserves from 2019 through mid-2020, followed by a period of depletion in cash assets while current liabilities steadily rose through 2022. This led to a pronounced dip in the cash ratio, pointing to tighter liquidity constraints during this interval. However, from 2023 onward, there is a clear recovery in cash assets and a stabilization of liabilities, resulting in an improved cash ratio above 1.30, indicative of strengthened short-term financial stability. The trends suggest a cycle of liquidity management where the company initially accumulated cash assets, then faced increased liabilities and reduced liquidity, before regaining a more balanced position in the most recent years.