Lam Research Corp. (NASDAQ:LRCX)

Inventory Turnover

The inventory turnover ratio shows a declining trend from 2.86 in 2020 to a low of 1.86 in 2024, before slightly recovering to 2.2 in 2025. This suggests a slowdown in the frequency at which inventory is sold and replaced over the years, indicating potentially increasing inventory levels or reduced sales efficiency.

Receivables Turnover

The receivables turnover ratio fluctuates, initially decreasing from 4.79 in 2020 to 3.99 in 2022, followed by a sharp increase to 6.17 in 2023. It then slightly declines again to 5.46 in 2025. This pattern indicates variability in the effectiveness of collecting receivables, with improved collection efficiency evident around 2023.

Payables Turnover

The payables turnover ratio remains relatively stable between 9.18 and 9.43 from 2020 to 2022, then spikes remarkably to 20.5 in 2023. This is followed by a decline to 11.07 in 2025. The large increase indicates that the company paid its suppliers much faster in 2023 before returning to a more moderate payment pace.

Working Capital Turnover

The working capital turnover ratio increases substantially from 1.31 in 2020 to a peak of 2.23 in 2022, then decreases to 1.74 in 2024 before increasing again to 2.32 in 2025. This indicates fluctuating efficiency in using working capital to generate revenue, with the highest efficiency observed in 2025.

Average Inventory Processing Period

The number of days required to process inventory extends over the period, from 128 days in 2020 to a peak of 196 days in 2024, before shortening to 166 days in 2025. This correlates with the declining inventory turnover, showing slower movement of inventory through the system.

Average Receivable Collection Period

The collection period is stable at 76 days in 2020 and 2021, then increases to 91 days in 2022 before sharply decreasing to 59 days in 2023. It then gradually increases to 67 days by 2025. This indicates improved receivables collection speed following 2022, although precision in collections lessened slightly toward 2025.

Operating Cycle

The operating cycle lengthens from 204 days in 2020 to a maximum of 258 days in 2024, before reducing to 233 days in 2025. This reflects the overall time taken to convert inventory and receivables into cash, extended primarily by longer inventory holding and collection periods.

Average Payables Payment Period

The payment period to suppliers is consistent around 39-40 days until 2022, drops significantly to 18 days in 2023, then increases moderately to 33 days by 2025. The shortened payment period in 2023 aligns with the spike in payables turnover, indicating quicker supplier payments during that year.

Cash Conversion Cycle

The cash conversion cycle shows an increasing trend from 164 days in 2020 to 229 days in 2024, then improves to 200 days in 2025. This suggests that the time to convert investments in inventory and receivables, after accounting for payables, has generally increased but showed signs of efficiency gains in the most recent period.

Cost of Goods Sold

The cost of goods sold (COGS) exhibited a general increasing trend from 2020 to 2023, rising from approximately 5.4 billion USD in 2020 to about 9.7 billion USD in 2023. A marked decline occurred in 2024, with COGS decreasing to roughly 7.9 billion USD, followed by a significant rebound to approximately 9.5 billion USD in 2025. This pattern indicates variability in production expenses or changes in sales volume over the period.

Inventories

Inventory levels increased steadily from 1.9 billion USD in 2020 to a peak of approximately 4.8 billion USD in 2023, representing consistent accumulation over four years. Subsequently, inventory declined to about 4.2 billion USD in 2024 but marginally increased again to nearly 4.3 billion USD in 2025. These fluctuations suggest adjustments in stock management possibly aimed at optimizing working capital or addressing demand variability.

Inventory Turnover

The inventory turnover ratio showed a declining trend overall, dropping from 2.86 in 2020 to a low of 1.86 in 2024. A moderate recovery to 2.2 was observed in 2025. This decline indicates a slowing rate at which inventory is sold and replaced, potentially reflecting longer inventory holding periods or reduced sales efficiency during those years, with some improvement in the latest period.

Overall Insights

The data reveals that while production costs and inventory levels generally increased up to 2023, a correction phase occurred in 2024 characterized by reduced COGS and inventory, accompanied by a drop in inventory turnover. The partial recovery in both turnover ratio and inventory levels in 2025 may reflect strategic adjustments to inventory management or market conditions. The fluctuations in COGS and inventory turnover ratios suggest responses to changing demand, cost control measures, or supply chain dynamics affecting operational efficiency.

Revenue Trend

Revenue exhibited a consistent upward trend from 2020 to 2023, increasing from approximately 10.04 billion to 17.43 billion US dollars. A notable decline occurs in 2024, where revenue decreases to about 14.91 billion US dollars. The following year, 2025, shows a significant recovery and growth, reaching approximately 18.44 billion US dollars, the highest value in the period analyzed.

Accounts Receivable (Net) Trend

Accounts receivable, net of allowance, generally shows growth from 2.10 billion US dollars in 2020 to a peak of around 4.31 billion US dollars in 2022. However, this is followed by a decline over the next two years, reaching approximately 2.52 billion in 2024. In 2025, the value rises again to around 3.38 billion US dollars, indicating some fluctuation and partial recovery in receivables.

Receivables Turnover Ratio Trend

The receivables turnover ratio remains relatively stable and close to 4.8 from 2020 to 2021, then dips to 3.99 in 2022, indicating a slower collection of receivables during this year. Subsequently, it increases markedly to 6.17 in 2023, suggesting improved collection efficiency. This elevated level is maintained somewhat in the next two years (5.92 in 2024 and 5.46 in 2025), although with a slight declining trend after 2023.

Insights and Observations

The data indicates strong revenue growth overall, despite a setback in 2024 that could warrant further investigation. The fluctuations in accounts receivable and its ratio suggest changes in credit policies, customer payment behaviors, or potentially seasonal effects on collections. The improvement in receivables turnover after 2022 is a positive signal of enhanced operational efficiency in managing credit sales and collections. The divergence between revenue and accounts receivable levels in certain years highlights the importance of ongoing monitoring of working capital management.

Cost of Goods Sold

The cost of goods sold displays a general upward trend from June 2020 to June 2023, increasing from approximately 5.44 billion to 9.65 billion US dollars. However, there is notable volatility in subsequent years, with a decline to roughly 7.85 billion in June 2024, followed by a rebound to about 9.46 billion by June 2025. This pattern suggests fluctuations in production expenses or sales volume that may be influenced by market conditions or internal operational factors.

Trade Accounts Payable

The trade accounts payable exhibit an increasing trend from 592 million in June 2020 to a peak of approximately 1.01 billion in June 2022. A sharp decline occurs in June 2023, dropping to 471 million, then gradually ascending again over the next two years to reach around 854 million by June 2025. This fluctuation could reflect changes in purchasing activity, payment policies, or credit terms negotiated with suppliers.

Payables Turnover Ratio

The payables turnover ratio remains relatively stable around 9.18 to 9.43 from June 2020 through June 2022, indicating consistent payment frequency to suppliers. A remarkable spike to 20.5 in June 2023 suggests a significantly faster payment cycle during that period. Following this spike, the ratio declines but remains elevated compared to earlier years, settling at 12.79 in June 2024 and 11.07 in June 2025. The increased turnover ratio may imply improved liquidity management or changes in vendor payment terms.

The financial data over the specified periods reveals several noteworthy trends in working capital, revenue, and working capital turnover. The analysis highlights the dynamic changes and underlying patterns in the operational efficiency and sales performance.

Working Capital

Working capital exhibited fluctuations throughout the periods under review. It started at approximately $7.69 billion and experienced an upward trend reaching a peak near $9.04 billion in the period ending June 25, 2023. Following this peak, working capital declined gradually over the next two periods, ending at nearly $7.95 billion by June 29, 2025. This pattern suggests some variability in the company's short-term liquidity management, maintaining substantial liquidity levels but with some periodic reductions after mid-2023.

Revenue

Revenue demonstrated a generally positive growth trajectory with some variability. Initial revenue was reported at approximately $10.04 billion, increasing sharply to over $17.43 billion by June 25, 2023. A notable dip occurred in the subsequent period ending June 30, 2024, where revenue fell to roughly $14.91 billion, before rebounding again to approximately $18.44 billion by June 29, 2025. This pattern indicates resilient sales growth with some interruptions possibly due to market or operational factors that temporarily impacted revenue.

Working Capital Turnover Ratio

The working capital turnover ratio, an indicator of how efficiently the company is utilizing its working capital to generate revenue, generally trended upward albeit with some fluctuations. Starting at 1.31, the ratio increased steadily to 2.23 by June 26, 2022, implying improved efficiency in converting working capital into sales. After a slight decline to 1.74 by June 30, 2024, the ratio rose significantly to 2.32 by June 29, 2025, surpassing previous highs. This suggests enhanced operational efficiency particularly in the most recent period, potentially reflecting better management of current assets and liabilities or an increase in sales relative to working capital.

Overall, the company showed strong revenue growth with some variability, effective though fluctuating working capital management, and a general improvement in the utilization efficiency of working capital. The most recent data points indicate an encouraging uptrend in working capital turnover, despite the moderate declines in working capital and periodic revenue contractions. These insights highlight areas of strength as well as potential opportunities for maintaining stability and further improving operational efficiency in the future.

Inventory Turnover

The inventory turnover ratio shows a downward trend from 2.86 in June 2020 to a low of 1.86 in June 2024. This indicates a decreasing frequency at which inventory is sold and replaced over the years. However, in the most recent period ending June 2025, there is a modest recovery to 2.2, suggesting some improvement in inventory management or sales efficiency.

Average Inventory Processing Period

The average inventory processing period, expressed in number of days, exhibits a generally increasing trend from 128 days in June 2020 to a peak of 196 days in June 2024. This reflects extended holding periods for inventory, possibly indicating slower sales or accumulation of stock. In the most recent period, this duration decreases to 166 days, aligning with the slight improvement seen in inventory turnover.

Overall Trends and Insights

The inverse relationship between inventory turnover and average inventory processing period is evident. Over the five-year span, slower turnover correlates with longer processing periods, pointing to potential challenges in inventory management or demand fluctuations. The recent partial reversal in both metrics suggests efforts to optimize inventory levels or improvements in market conditions. Close monitoring of these trends is advisable to ensure efficient working capital management going forward.

Receivables Turnover

The receivables turnover ratio experienced moderate fluctuations over the observed periods. Initially, it was relatively stable around 4.79 to 4.83 from mid-2020 to mid-2021. A decline occurred in mid-2022, dropping to 3.99, indicating slower collection efficiency during that year. However, the ratio then improved sharply in mid-2023 to 6.17, suggesting a significant enhancement in receivables management. This upward trend slightly tapered off in the subsequent years, with ratios of 5.92 in mid-2024 and 5.46 in mid-2025, maintaining a healthy level compared to earlier years.

Average Receivable Collection Period

The average receivable collection period shows an inverse pattern relative to the receivables turnover, as expected. It remained steady at 76 days for the first two periods (2020 and 2021), then increased notably to 91 days in mid-2022, reflecting slower collections and potential liquidity concerns. Following this peak, the period decreased markedly to 59 days in mid-2023, consistent with the improved turnover ratio observed. In the final two periods, the collection period lengthened slightly to 62 days in mid-2024 and 67 days in mid-2025, still representing better efficiency than the peak in 2022 but indicating a mild loosening in collection terms.

Overall Insights

The data indicates that the company experienced a period of reduced receivables efficiency around mid-2022, characterized by slower collections and a lower turnover ratio. This was followed by a significant recovery in the following year, highlighting improved credit management or stronger customer payment discipline. Although the improvement slightly diminished towards the end of the period, the receivables performance remained better than the mid-2022 low point. These trends suggest effective adjustments in credit policies or collection efforts post-2022 that positively impacted the company's working capital management.

Average Inventory Processing Period

The average inventory processing period shows an overall increasing trend from 128 days in 2020 to a peak of 196 days in 2024, followed by a decrease to 166 days in 2025. This indicates that inventory was held longer over most of the period, suggesting potential challenges in inventory turnover efficiency or changes in inventory management policies, before improving in the last year observed.

Average Receivable Collection Period

The receivable collection period remained stable at 76 days in 2020 and 2021, then increased significantly to 91 days in 2022. Subsequently, it declined sharply to 59 days in 2023, with a moderate increase to 62 days in 2024 and 67 days in 2025. These fluctuations suggest variability in the company's credit collection effectiveness, with a notable improvement in 2023 and slight relaxation in collection terms or customer payment behavior afterward.

Operating Cycle

The operating cycle, which combines inventory processing and receivables collection periods, generally increased from 204 days in 2020 to a maximum of 258 days in 2024, indicating an elongation of the overall cash conversion cycle. The subsequent reduction to 233 days in 2025 reflects a partial reversal of this trend but still denotes a longer cash conversion cycle compared to the initial years. This suggests that while the company faced a lengthening working capital cycle, it managed to reduce it somewhat in the most recent year.

Payables Turnover Trend

The payables turnover ratio remained relatively stable from 2020 to 2022, fluctuating between 9.18 and 9.43. However, a significant increase occurred in 2023, where the ratio more than doubled to 20.5. This spike indicates a much faster rate of paying off suppliers during that period. Subsequently, the ratio decreased to 12.79 in 2024 and further to 11.07 in 2025, suggesting a moderation but still higher turnover compared to the initial years.

Average Payables Payment Period Trend

The average payables payment period decreased from 40 days in 2020 to 39 days in 2021 and 2022, showing consistency in payment timing. In 2023, this period sharply dropped to 18 days, indicating that payables were settled much faster. In 2024, the payment period extended to 29 days, and further increased to 33 days in 2025, reflecting a gradual return to longer payment terms but still not reaching pre-2023 levels.

Relationship Between Ratios

The inverse relationship between payables turnover and average payment period is evident. The peak in payables turnover in 2023 coincides with the lowest average payment period, highlighting a strategic shift toward quicker payments during that year. The subsequent years show a trend toward balancing payment speed and maintaining cash flow, as indicated by the convergence towards more moderate values in both metrics.

Average Inventory Processing Period

The average inventory processing period shows a general increasing trend over the years. Starting at 128 days in 2020, it remained relatively stable in 2021 at 126 days, before rising noticeably to 155 days in 2022. The upward trend continued, peaking at 196 days in 2024, followed by a decline to 166 days in 2025. This indicates a lengthening time to process inventory with a slight improvement in the latest period.

Average Receivable Collection Period

The average receivable collection period fluctuates over the examined years. It was steady at 76 days for 2020 and 2021, increased to 91 days in 2022, then dropped significantly to 59 days in 2023. The period then slightly increased again to 62 days in 2024 and 67 days in 2025. This pattern suggests variability in the efficiency of receivables collection, with a notable improvement in 2023 followed by a moderate increase afterward.

Average Payables Payment Period

The average payables payment period exhibits a decreasing trend initially, dropping from 40 days in 2020 to 39 days in 2021 and remaining stable in 2022. A sharp decline to 18 days occurred in 2023, indicating faster payment to suppliers. This period then rose to 29 days in 2024 and further to 33 days in 2025, suggesting a return towards longer payment durations.

Cash Conversion Cycle

The cash conversion cycle demonstrates an overall increasing trend from 164 days in 2020 to a peak of 229 days in 2024. After this apex, there is a decrease to 200 days in 2025. The cycle lengthening suggests that the company's net operating cycle became more extended over time, primarily influenced by increases in inventory processing and fluctuations in receivables and payables periods. The decline in 2025 indicates an improvement in cash flow efficiency.