Lam Research Corp. (NASDAQ:LRCX)

The analysis of the liquidity ratios over the reported periods reveals several key trends and insights regarding the company's short-term financial health.

Current Ratio

The current ratio exhibited a generally downward trend from a high of 3.31 in late September 2020 to 2.21 by late September 2025. There were periods of stabilization and minor recoveries, such as around late 2022 and mid-2024, but the overall decline suggests a tightening in the company's ability to cover short-term liabilities with current assets over these five years. The ratio consistently remained above 2, indicating a comfortable liquidity buffer despite the decreasing trend.

Quick Ratio

Similar to the current ratio, the quick ratio showed a slight downward trajectory from 1.89 in late September 2020 to around 1.54 by late September 2025. Fluctuations occurred throughout the quarters, with some temporary increases notably in mid-2023 and mid-2024. The values staying above 1 for most periods indicate the company generally maintained adequate liquid assets (excluding inventories) to cover immediate liabilities, though with some erosion in margin over time.

Cash Ratio

The cash ratio displayed more variability, starting at 1.21 in late September 2020, experiencing a noticeable decline to lows around 0.77 to 0.84 during 2021-2022, and recovering back to approximately 1.00 by late September 2025. This pattern suggests changes in cash and cash equivalents relative to current liabilities, with periods of more conservative cash holdings and subsequent replenishment. The ratio staying close to or above 1 in many quarters indicates generally strong liquidity in immediate cash availability, albeit with phases of reduced cash buffer.

Overall, the liquidity ratios collectively reflect a company that maintained a robust liquidity position throughout the periods analyzed but faced gradual decreases in short-term asset coverage relative to liabilities. The declining trends in current and quick ratios suggest cautious monitoring of working capital components may be advisable. The recovery in the cash ratio towards the end of the reported timeframe points to possible efforts to enhance immediate cash reserves, improving the capacity to meet short-term obligations without reliance on inventory conversion.

The analysis of the quarterly financial data reveals several notable trends in the company’s short-term financial position over the observed periods.

Current Assets

The value of current assets shows an overall upward trend across the analyzed quarters. Beginning at approximately 11.3 billion USD, current assets generally increased with some fluctuations, reaching a peak near 14.8 billion USD by the last reported quarter. This indicates growth in liquid and short-term assets available to meet obligations.

Current Liabilities

Current liabilities also exhibit a rising trend over the period, starting around 3.4 billion USD and increasing to approximately 6.7 billion USD by the end. The increase is somewhat steady, especially notable in the later quarters where liabilities jump significantly, reflecting increased short-term obligations.

Current Ratio

The current ratio begins at a strong level above 3.3, implying a comfortable liquidity position where current assets sufficiently cover current liabilities. However, a gradual declining trend is apparent over the quarters, declining below 2.5 in recent periods and stabilizing at 2.21 by the final quarter. This suggests a weakening in liquidity margins despite growth in absolute current assets, mainly due to the proportionally faster increase in current liabilities.

In summary, the company’s current assets have generally expanded, which is a positive indicator of liquidity growth. Nonetheless, current liabilities have increased at a higher rate, leading to a decline in the current ratio. This implies the company’s short-term financial safety margin has lessened, which may warrant closer monitoring to ensure continued ability to cover short-term obligations without strain.

Total Quick Assets

Total quick assets experienced fluctuations over the periods observed, starting at approximately 6.45 billion USD in September 2020 and generally exhibiting an upward trend towards the later dates. Notably, there was a peak around September 2022 with approximately 8.83 billion USD, followed by some declines and recoveries. By September 2025, total quick assets reached about 10.33 billion USD, indicating strong growth over the five-year horizon despite intermediate volatility.

Current Liabilities

Current liabilities showed an overall increasing pattern throughout the quarters. Beginning at roughly 3.41 billion USD in September 2020, current liabilities rose steadily with some minor fluctuations. A significant increase occurred from mid-2024 onwards, culminating in liabilities of about 6.71 billion USD by September 2025. This growth in current liabilities outpaced some periods of growth in quick assets, suggesting increased short-term obligations.

Quick Ratio

The quick ratio started at a relatively strong level of 1.89 in September 2020, indicating a healthy liquidity position. Early in the timeline, the ratio showed variability but mostly remained above 1.7, peaking near 2.2 in late 2021, which reflects improved short-term liquidity. However, from mid-2022 onwards, there was a declining trend with the quick ratio dropping below 1.6 by mid-2025. This decline suggests a reduction in immediate liquidity buffer relative to current liabilities, potentially signaling tighter liquidity management or increased short-term liabilities relative to quick assets.

Summary of Trends and Insights

Overall, total quick assets have increased substantially over the observed periods, demonstrating growth in liquid or near-liquid resources. Concurrently, current liabilities have also increased significantly, nearly doubling over the five-year span. The quick ratio, a key indicator of liquidity, reflected early strength and improvement but subsequently declined in the latter part of the timeline, hinting at potential liquidity pressure despite the growth in quick assets.

The simultaneous rise in both quick assets and current liabilities, accompanied by a declining quick ratio, may indicate that current liabilities are growing at a faster rate than quick assets in recent quarters. This situation could warrant attention to liquidity management practices, to ensure that the company maintains sufficient short-term financial flexibility.

Total Cash Assets

Total cash assets show considerable fluctuations over the examined periods. Initially, cash assets declined from approximately 4.13 billion to around 3.68 billion, followed by a rebound and fluctuations ranging between roughly 3.5 billion and 5.1 billion through mid-2023. From late 2023 onwards, a consistent upward trend is observed, with total cash assets increasing steadily from about 5.62 billion to approximately 6.69 billion by the final period.

Current Liabilities

Current liabilities demonstrate a general increasing trend across the periods, with some short-term variability. The liabilities rose from approximately 3.41 billion to over 3.61 billion initially, followed by increments reaching near 4.2 billion to 4.5 billion in the mid-2020s. Most notably, liabilities accelerated in the last few periods, surging from roughly 4.27 billion to nearly 6.71 billion by the end of the timeline.

Cash Ratio

The cash ratio, which measures the ability to cover current liabilities with cash assets, exhibits notable volatility. Starting above 1.2, it dips closer to and below 1 in some interim quarters, particularly reaching lows around 0.77 and 0.84. However, the ratio recovers at times to peaks above 1.3, reflecting stronger liquidity. In the final periods, the cash ratio slightly decreases from around 1.14 down to approximately 0.97, indicating a modest reduction in cash resource coverage relative to liabilities but staying near the threshold of 1.0.

Summary Insights

The pattern suggests that while both total cash assets and current liabilities have generally increased over time, liabilities have risen at a more rapid pace, especially in the latest periods. This dynamic contributes to the observed fluctuations and recent slight decline in the cash ratio, signaling a tightening liquidity position. Despite this, cash assets remain substantial, and the cash ratio's proximity to 1 throughout the timeline indicates a consistent effort to maintain coverage of short-term obligations through liquid assets.