Lam Research Corp. (NASDAQ:LRCX)

The financial ratios exhibit distinctive trends over the observed quarterly periods, highlighting changes in operational efficiency and liquidity management.

Inventory Turnover

The inventory turnover ratio declined gradually, moving from approximately 2.86 in mid-2020 to a low near 1.75 by late 2023, before slightly rebounding to 2.2 by mid-2025. This suggests a slowing rate of inventory movement and potentially increased inventory holding periods toward the latter periods.

Receivables Turnover

The receivables turnover ratio demonstrates some volatility but generally improved in recent quarters. After fluctuating between about 4 and 6 from 2020 through early 2023, it peaked above 6 in mid-2023, followed by slight decreases and stabilization around 5.3 to 5.5 in 2024 and 2025, indicating somewhat faster collection of receivables in those recent years.

Payables Turnover

Payables turnover showed an increasing trend from about 8.9 in early 2020 to a notable peak of over 20 in early 2023, reflecting more rapid payments to suppliers. However, it decreased steadily thereafter, reaching approximately 11 by mid-2025, signaling a return to somewhat slower payment cycles in the latest periods.

Working Capital Turnover

The working capital turnover ratio increased from roughly 1.3 in 2020 to over 2.3 by mid-2025, indicating improved efficiency in using working capital to generate revenue. Despite minor fluctuations, the overall trend points to better utilization of net working capital over time.

Average Inventory Processing Period

The number of days inventory is held rose significantly from about 128 days in mid-2020 to a peak exceeding 208 days by late 2023. This lengthening inventory period correlates with the declining inventory turnover ratio and suggests increased inventory accumulation or slower inventory movement. A modest decline to 166 days by mid-2025 indicates some normalization.

Average Receivable Collection Period

The collection period displayed variability, increasing from around 76 days in 2020 to a peak near 93 days in 2022, then decreasing markedly to approximately 56 days by late 2023. It stabilized between 62 and 74 days thereafter, implying an initial stretch in collections followed by enhanced collection effectiveness in recent years.

Operating Cycle

The operating cycle duration, measuring the time to convert inventory and receivables into cash, extended from near 204 days in 2020 to a high around 275 days by late 2023, before declining to approximately 233 days by mid-2025. This suggests increasing capital tied up in operations before recent improvements.

Average Payables Payment Period

The payment period for payables shortened from about 40 days to a low near 18 days in early 2023, reflecting faster payments, then gradually increased to around 35 days by mid-2025. This pattern implies fluctuating supplier payment practices with a return to moderate extensions in payment terms recently.

Cash Conversion Cycle

The cash conversion cycle, representing the net time for cash flow turnarounds, lengthened from approximately 164 days in 2020 to over 252 days by late 2023. It then decreased to about 200 days by mid-2025, suggesting prolonged cash deployment periods followed by partial recovery towards improved liquidity management.

In summary, the company experienced increasing operational cycle lengths and slower inventory turnover until late 2023, accompanied by faster collections and payments shifting in a wide range. The latter periods show signs of operational efficiency recovering, with improvements in turnover ratios and reductions in cycle durations contributing to enhanced working capital utilization and liquidity positions.

The cost of goods sold (COGS) exhibits a fluctuating upward trend over the observed periods, with notable variations. Initially, from September 2019 through September 2022, COGS generally increases from approximately 1.18 billion to about 2.74 billion USD, suggesting growing production or sales volumes. However, from September 2022 to March 2023, there is a significant decline from roughly 2.9 billion to 2.26 billion USD, followed by further decrease through June 2023 to around 1.75 billion USD. Subsequently, COGS rises again gradually, reaching approximately 2.58 billion USD by June 2025. This pattern indicates periods of contraction and recovery in production or sales costs, potentially reflecting seasonal influences or market conditions.

Inventories consistently rise from about 1.48 billion USD in September 2019 to nearly 4.82 billion USD by December 2022, indicating accumulation of stock over this timeframe. After reaching a peak near 4.88 billion USD in March 2023, inventory levels stabilize and then begin a gradual decline, falling to approximately 4.31 billion USD by June 2025. This reduction may suggest improved inventory management or changes in demand affecting stockholding.

The inventory turnover ratio starts from 2.86 in June 2020 and exhibits a declining trend until it reaches its lowest point at 1.75 by September 2023, indicating that the company is selling and replacing its inventory less frequently. After this low, the turnover ratio improves slightly, reaching around 2.2 by June 2025, which suggests a modest recovery in the efficiency of inventory usage.

Cost of Goods Sold

Overall upward trend from 2019 to late 2022, sharp decline in early 2023, followed by gradual recovery through 2025.

Inventories

Steady increase until early 2023, peaking near 4.88 billion USD, then a gentle decrease through mid-2025.

Inventory Turnover Ratio

Decline from about 2.9 in 2020 to a low near 1.75 in 2023, improving slightly to around 2.2 by mid-2025, indicating changes in inventory management efficiency.

The combined analysis of these metrics suggests that while there was initial growth and accumulation in production and stockholdings, the company experienced a period of reduced sales or stock movement efficiency circa early 2023. The subsequent partial recovery in inventory turnover and COGS implies efforts to optimize operations and respond to changing market circumstances.

The revenue of the company exhibited a generally increasing trend from September 2019 through December 2022, peaking at 5,277,569 thousand US dollars in the last quarter of 2022. Following this peak, revenue experienced a notable decline in the first half of 2023, hitting a low of 3,207,257 thousand dollars in June 2023. After this dip, revenue gradually recovered and resumed an upward trajectory, reaching 5,171,393 thousand dollars by June 2025. This pattern suggests a period of volatility in 2023 followed by steady growth thereafter.

Accounts receivable, less allowance, showed some fluctuations over the period. From September 2019 to December 2021, it generally increased, reaching a peak of 4,569,735 thousand US dollars in September 2022. However, a significant reduction in receivables was observed in 2023, falling to 2,813,376 thousand dollars by June 2023. In the later quarters, accounts receivable partially rebounded, ending at 3,378,071 thousand dollars in June 2025, which remains below the earlier peak level. This suggests variability in the collection or credit policies impacting the receivables balance.

The receivables turnover ratio, available from March 2020 onwards, displayed variability within a range approximately between 3.94 and 6.46. Initially, the ratio hovered around 4.1 to 4.8, declined mid-2021 to near 3.9, before improving significantly to a high of 6.46 by September 2023, suggesting more efficient collection or faster turnover of receivables during that period. After this peak, the turnover ratio fluctuated moderately, ending at 5.46 in June 2025, indicating a relatively stable and efficient receivables management toward the end of the period.

Revenue

General increase from 2,165,746 to peaks over 5 million US$; notable dip in 2023 followed by recovery.

Accounts Receivable, less allowance

Growth through 2022 with a peak around 4.57 million US$; sharp decrease in early 2023; partial recovery afterward.

Receivables Turnover Ratio

Fluctuated from just below 4 to above 6; indicated improved efficiency in receivables management especially in late 2023 period.

The data presents multiple financial metrics over a series of quarterly periods. Several notable trends emerge regarding cost of goods sold, trade accounts payable, and payables turnover ratio.

Cost of Goods Sold (COGS)

The COGS shows a general upward trend from September 2019 through December 2022, increasing from approximately 1.18 billion USD to a peak near 2.9 billion USD. This indicates rising expenses directly related to production or acquisition of goods over this period. However, starting in March 2023, COGS displays significant volatility and decline, dropping sharply to around 1.75 billion USD by June 2023. Subsequent quarters see a gradual recovery with fluctuations but remaining below the earlier peak values through mid-2025. This pattern may reflect operational adjustments, cost controls, or changes in production volume during recent quarters.

Trade Accounts Payable

Trade accounts payable steadily increased from around 416 million USD in September 2019 to over 1.14 billion USD by September 2022. After this peak, a marked decline occurs through March 2023, dropping to about 470 million USD, followed by slight recovery and fluctuations ranging between approximately 500 million USD and 850 million USD through mid-2025. This suggests variations in the timing or volume of payments to suppliers, possibly linked to changes in purchasing activity or credit terms.

Payables Turnover Ratio

The payables turnover ratio, available starting June 2020, initially slightly declined from 9.18 to a low near 8.52 by September 2022, indicating slower payment processing or longer payment terms. Starting in December 2022, there is a noticeable and rapid increase in the ratio to above 20 by March 2023, followed by a gradual decline toward 10-11 in subsequent quarters. The sharp increase during late 2022 to early 2023 signals a phase of much faster payment to suppliers, which coincides with the observed decrease in trade payables and COGS in this period. The subsequent decline towards more moderate turnover suggests normalization of payment practices.

In summary, the company experienced sustained growth in cost of goods sold and payables through late 2022, followed by a period of sharp reduction in both metrics and a spike in payables turnover, indicating possible operational shifts such as accelerated supplier payments or decreased production activity around early 2023. The later periods show signs of stabilization but at levels below the previous highs, which may reflect market or business cycle adjustments.

Working Capital

Working capital expressed in thousands of US dollars shows fluctuations over the reported periods. Initially, it decreased from approximately 6.4 million at the end of 2019 to about 5.9 million in December 2019. Afterwards, there was a general upward trend reaching a peak of approximately 9.16 million in December 2022. From this peak, the figure exhibited some variability but showed a decreasing trend rolling into 2025, ending around 7.95 million. Notably, the working capital remained substantially higher in the latter years compared to the earlier periods, indicating an overall increase in liquidity or current asset management capacity.

Revenue

Revenue, also in thousands of US dollars, experienced substantial growth from 2.17 million in September 2019 to a peak of over 5.27 million in December 2022. This growth trajectory was marked by a consistent upward momentum until December 2022, with interim variations. Noteworthy is a significant dip in revenue during 2023, reaching lows near 3.2 million in December 2023, before recovering steadily throughout 2024 and into mid-2025, surpassing previous highs and approaching 5.17 million by June 2025. This pattern suggests some external or operational challenges during 2023, followed by a strong recovery phase.

Working Capital Turnover Ratio

The working capital turnover ratio, absent for earlier periods, is available starting mid-2020 and shows a general upward trend from 1.31, gradually increasing to over 2.32 by June 2025. The ratio peaked close to 2.23 in December 2021, dipped slightly afterwards, but began to rise again from late 2023 onward, indicating an improving efficiency in generating revenue from working capital over time. Despite some fluctuations, the overall trend signifies enhanced management effectiveness in utilizing working capital to drive sales.

Summary of Trends

There is a positive long-term trend in both revenue and working capital, although a distinct dip in revenue occurred during 2023. The working capital turnover ratio improvement alongside revenue growth generally reflects better operational efficiency. The dip in revenue during 2023 is not directly mirrored in working capital, suggesting possible inventory adjustments or changes in current liabilities. Post-2023 data indicate a recovery phase characterized by rising revenue and working capital turnover, pointing toward stabilizing business performance and efficient resource utilization.

Over the observed periods, inventory turnover exhibits a clear downward trend followed by a recent recovery. Starting at a turnover ratio of 2.86, the ratio marginally declines through several quarters, reaching a low point near 1.75 to 1.77 between March 2024 and June 2024. Subsequently, there is an upward movement, rising to about 2.20 by June 2025. This pattern suggests an initial gradual reduction in the frequency with which inventory is sold and replaced, potentially indicating slower sales or increased inventory levels, followed by improved inventory management or increased sales activity towards the end of the period.

Parallel to the inventory turnover, the average inventory processing period, measured in days, shows an inverse pattern consistent with the turnover trend. Starting at 128 days, the number of days steadily increases, peaking at approximately 208 days around March and June 2024. This rise indicates that inventory remains on hand for longer periods, implying either slower movement of goods or accumulation of stock. Following this peak, a reduction is observed, with the processing period decreasing to 166 days by June 2025, aligning with the recovery noted in the turnover ratio.

Inventory Turnover

Demonstrates a decline over the majority of the periods analyzed, from approximately 2.86 to a low near 1.75, suggesting slower inventory movement or increased stock levels. The latter periods show a recovery trend, rising back to around 2.20.

Average Inventory Processing Period

Increases progressively from 128 days to a peak around 208 days, indicating longer durations of inventory holding. This is followed by a decrease to 166 days in the most recent period, reflecting improved efficiency or faster inventory turnover.

These inverse but complementary trends between inventory turnover and average inventory processing period are typical and coherent, as an increase in days inventory is held implies a decrease in turnover ratio, and vice versa. The data indicate that the company experienced a period of slower inventory movement or buildup, which may have implications for cash flow and inventory management strategies, but has recently improved inventory efficiency.

Receivables Turnover Ratio

The receivables turnover ratio, starting from a value of 4.79 in June 2020, exhibits moderate fluctuations over the observed periods. Initially, there was a decline reaching a low near 3.94 by September 2022. Subsequently, a notable upward trend occurred, peaking at 6.46 in March 2024. After this peak, the ratio showed a gradual decrease, stabilizing around the 5.3 to 5.5 range in the most recent quarters up to June 2025.

Average Receivable Collection Period (Days)

The average collection period in days inversely aligns with the receivables turnover ratio. Beginning at 76 days in June 2020, the period increased, reaching a maximum of 93 days in September 2022, indicating slower collection during this timeframe. Following this peak, the collection period improved significantly, dropping to 56 days by March 2024. Around the latest quarters, it edged upward slightly, settling near the high 60s to low 70s range between March and June 2025.

Overall Pattern and Insights

The data indicates a period of declining efficiency in receivables management from mid-2020 to late 2022, marked by decreasing turnover ratios and lengthening collection periods. This suggests that the company faced challenges in collecting receivables promptly during this interval. From late 2022 onward, there is evidence of a recovery in operational efficiency, with improved turnover ratios and shortened collection periods, pointing to enhanced credit and collection practices. The slight recent uptick in collection days and modest decline in turnover ratio may warrant continued monitoring to ensure sustained improvement.

The financial data demonstrates several noteworthy trends in the company's operational efficiency metrics over the observed periods.

Average Inventory Processing Period

This metric shows an initial presence from the fourth reported period onward, starting at 128 days. Generally, there is an upward trend with fluctuations, peaking around 208 days in the twentieth period. Following this peak, a modest decline is noticeable, bringing the period down to 166 days by the last reported quarter. This indicates increasing inventory holding times over several years, suggesting either longer production cycles or slower inventory turnover, followed by a slight improvement in more recent quarters.

Average Receivable Collection Period

The receivable collection period displays variability without a clear long-term upward or downward trend. It starts at 76 days, increases to a peak of 93 days, then declines significantly to as low as 56 days before exhibiting moderate fluctuations around the 60-70 days range. This pattern suggests periodic challenges in receivables management, interspersed with phases of improved collection efficiency.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, shows a consistent upward movement from 204 days to a maximum of 275 days, indicating an elongation in the overall cash conversion cycle. After reaching this peak, the cycle stabilizes somewhat, oscillating around the 250-260 day mark before a slight reduction to 233 days by the latest period. This trend reflects extended working capital tied up in operations over time, with some recent improvement.

In summary, the lengthening average inventory processing period is a key driver of the increased operating cycle, while the average receivable collection period contributes with moderate variability. The recent declines in both inventory days and operating cycle suggest ongoing efforts to enhance operational efficiency and cash flow management have begun to take effect.

Payables Turnover Ratio

The payables turnover ratio data begins from September 27, 2020, indicating a fluctuating pattern over the observed periods. Initially, the ratio shows a decline from 9.18 to 8.52 by September 25, 2022. Subsequently, there is a sharp increase reaching a peak at 20.5 by March 26, 2023. After this peak, the ratio steadily decreases, stabilizing in the 10-15 range towards the end of the dataset. This signifies that the frequency of payables payment increased sharply at one point but eventually moderated to more consistent levels.

Average Payables Payment Period (in days)

The average payables payment period inversely mirrors the payables turnover trend. It starts at 40 days on September 27, 2020, gradually increasing to 43 days by September 25, 2022. Then, coinciding with the sharp rise in the payables turnover ratio, the payment period abruptly drops to 18 days by March 26, 2023, indicating faster payment cycles. Following this, the period rises again, stabilizing around the low 30s days by mid-2025. This suggests a return to longer payment periods after the rapid payment phase.

Overall Observations

The data reveals a dynamic payables management strategy with a significant shift occurring around late 2022 to early 2023. Before this shift, payment periods lengthened slightly, indicative of slower payments or extended credit terms. The sharp increase in turnover ratio coupled with the decrease in payment period suggests a transition to quicker settlement of payables, possibly for operational or strategic reasons. Later, these measures trend back to a more moderate level, reflecting a stabilization in payable management practices.

Average Inventory Processing Period

The average inventory processing period exhibits a generally increasing trend over the measured quarters. Starting from 128 days around September 2020, the period extends steadily, reaching a peak of 208 days by September 2024. Subsequently, there is a gradual decline down to 166 days by June 2025. This suggests a lengthening in the time inventory remains in the system for most of the period, with some improvement seen in the latest quarters.

Average Receivable Collection Period

Receivable collection periods show more variability but with an overall downward tendency from the earlier peaks. Initially fluctuating between 75 and 93 days during 2020 to 2022, the cycle shortens significantly to 59 days by June 2023. After this low point, the period modestly increases but remains below previous highs, stabilizing around the mid-60s to low 70s days toward mid-2025. This indicates a more efficient collection process after 2022 with minor fluctuations thereafter.

Average Payables Payment Period

The payables payment period reduces noticeably from the higher 30s and low 40s days range seen in 2020 through early 2022, reaching a low around 18 days in March 2023. After this trough, there is a gradual increase, stabilizing around the low to mid-30s by 2025. This pattern suggests a shift to faster payments for a significant period, followed by a moderation toward more balanced payment timings.

Cash Conversion Cycle

The cash conversion cycle generally trends upward from 164 days in September 2020 to a peak of 252 days around September 2024. This indicates that the overall time taken from outlay of cash to cash recovery lengthened during this period. Following the peak, the cycle declines to 200 days by June 2025, reflecting some improvements in working capital management or operational efficiency in recent quarters.