Lam Research Corp. (NASDAQ:LRCX)

The liquidity position, as indicated by the current, quick, and cash ratios, exhibits a generally declining trend over the observed period from September 2020 to December 2025. While fluctuations occur, a consistent downward movement is apparent in all three metrics, particularly in the latter half of the timeframe.

Current Ratio

The current ratio begins at 3.31 and generally decreases, reaching a low of 2.21 in June and September 2025 before a slight recovery to 2.26 and 2.26 respectively. Initial values demonstrate a strong ability to cover short-term liabilities with short-term assets. However, the ratio’s decline suggests a diminishing capacity to meet these obligations with the same ease over time. A brief increase is observed in December 2022, but this is not sustained.

Quick Ratio

The quick ratio follows a similar pattern to the current ratio, starting at 1.89 and decreasing to 1.49 in June 2025, with a slight increase to 1.54 and 1.56 in the final two periods. This ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. The decline indicates a weakening ability to meet short-term obligations with the most liquid assets. The quick ratio consistently remains below the current ratio, as expected.

Cash Ratio

The cash ratio demonstrates the most pronounced decline of the three metrics. Beginning at 1.21, it decreases to 0.97 in June 2025, with a slight recovery to 0.99 and 0.99 in the final two periods. This ratio, focusing solely on cash and cash equivalents, reveals a decreasing ability to cover immediate liabilities with the most liquid assets available. The ratio dips below 1.00 in several periods, indicating that cash and cash equivalents alone are insufficient to cover immediate liabilities during those times.

Overall, the observed trends suggest a gradual erosion of the liquidity position. While the ratios remain above zero throughout the period, the consistent decline warrants attention. The decreasing trends in all three ratios suggest a potential shift in asset composition or changes in short-term liabilities, or both. Further investigation into the underlying drivers of these changes would be beneficial.

The current ratio for the analyzed period demonstrates a generally decreasing trend, punctuated by periods of relative stability and occasional increases. Initially, the ratio fluctuated around 3.2 to 3.3 between September 2020 and June 2021. A subsequent decline began in the latter half of 2021, continuing through much of 2022 and 2023, before showing some volatility in the most recent periods.

Overall Trend

From September 2020 to June 2021, the current ratio exhibited a relatively stable pattern, oscillating between 3.13 and 3.31. A noticeable downward trend commenced in September 2021, with the ratio decreasing from 3.27 to a low of 2.21 by June 2025. While there were minor fluctuations, the overall direction remained downward for a significant portion of the analyzed timeframe.

Short-Term Fluctuations

A slight increase was observed in the current ratio between December 2022 (3.01) and March 2023 (3.09). Another minor increase occurred between March 2023 (3.09) and June 2023 (3.16). However, these increases were not sustained, as the ratio continued its overall decline in subsequent periods.

Recent Performance

The most recent four quarters (March 2024 – December 2024) show a continued low range for the current ratio, fluctuating between 2.45 and 2.97. This suggests a sustained period of lower liquidity compared to earlier periods in the analysis. The ratio experienced a further decline to 2.21 in June 2025, followed by a slight increase to 2.26 in September 2025 and 2.26 in December 2025.

The observed decline in the current ratio suggests a potential increase in short-term obligations relative to current assets. While the ratio generally remained above 2.0 throughout the period, the recent trend warrants monitoring to ensure the entity maintains sufficient liquidity to meet its short-term liabilities.

The quick ratio for the analyzed period demonstrates fluctuations, generally remaining above 1.5, indicating a consistent ability to meet short-term obligations with highly liquid assets. However, a discernible trend towards a decrease in the ratio is observed in the latter portion of the analyzed timeframe.

Overall Trend

From September 2020 through December 2021, the quick ratio generally increased, peaking at 2.20. Following this peak, the ratio experienced a decline, with periods of slight recovery, but ultimately trending downwards through December 2025. The ratio decreased from 2.20 in December 2021 to 1.56 in December 2025.

Initial Period (Sep 2020 - Dec 2021)

The period between September 2020 and December 2021 shows a generally positive trend. The quick ratio began at 1.89 and rose to 2.20, suggesting improving liquidity during this timeframe. This improvement coincided with increases in both quick assets and current liabilities, but the growth in quick assets outpaced that of current liabilities.

Mid-Period Fluctuations (Mar 2022 - Jun 2023)

From March 2022 to June 2023, the quick ratio exhibited more volatility. It decreased from 1.88 to 1.72, then recovered to 1.95, before declining again to 1.87. This period suggests a less stable liquidity position, with fluctuations potentially linked to changes in working capital management or short-term financing strategies.

Recent Decline (Sep 2023 - Dec 2025)

The most recent period, from September 2023 to December 2025, reveals a consistent downward trend in the quick ratio. Starting at 1.95, the ratio decreased to 1.56. This decline is attributable to a faster rate of growth in current liabilities compared to quick assets. Specifically, current liabilities increased significantly from US$4.272 billion to US$6.568 billion, while quick assets increased from US$8.331 billion to US$9.672 billion. This suggests a potential weakening in the company’s short-term liquidity position.

Notable Observations

The quick ratio remained above 1.0 throughout the entire period, indicating that the company consistently possessed more quick assets than current liabilities. However, the decreasing trend in the latter half of the analyzed timeframe warrants attention. The ratio’s decline from 1.93 in June 2023 to 1.56 in December 2025 suggests a potential increase in liquidity risk.

The cash ratio for the analyzed period demonstrates fluctuations, generally remaining above one, indicating a consistent ability to meet current liabilities with solely cash and cash equivalents. However, there are periods of decline that warrant further investigation.

Overall Trend

The cash ratio generally fluctuates between 0.77 and 1.35 over the observed timeframe. While generally healthy, a noticeable dip occurred between March 2022 and June 2022, followed by a recovery. The ratio appears to be stabilizing in the most recent periods, hovering around 1.0.

Initial Period (Sep 2020 - Dec 2020)

The cash ratio began at 1.21 and decreased to 1.03. This initial decline suggests a slight increase in current liabilities relative to cash assets, though the company still maintained a comfortable margin of liquidity.

Growth Phase (Mar 2021 - Dec 2021)

From March 2021 through December 2021, the cash ratio experienced an upward trend, peaking at 1.32. This indicates a strengthening liquidity position, likely due to increases in cash assets or decreases in current liabilities, or a combination of both.

Decline and Recovery (Mar 2022 - Jun 2022)

A significant decrease in the cash ratio was observed from March 2022 (1.00) to June 2022 (0.77). This represents the lowest point in the analyzed period and suggests a potential strain on short-term liquidity. The ratio then began to recover in subsequent quarters.

Stabilization and Recent Performance (Sep 2022 - Jun 2025)

Following the recovery, the cash ratio stabilized, fluctuating between 0.84 and 1.35. The most recent periods show a slight downward trend, with the ratio at 0.97 in June 2025. While still above one, this warrants monitoring to ensure continued liquidity.

Cash Asset and Liability Relationship

Total cash assets generally increased over the period, from approximately US$4.13 billion in September 2020 to US$6.39 billion in June 2025. Current liabilities also increased, from US$3.41 billion to US$6.57 billion over the same period. The fluctuations in the cash ratio are a direct result of the differing rates of change between these two components.

In conclusion, the company generally demonstrates a strong liquidity position as indicated by the cash ratio. However, the observed decline in the ratio during the period from March 2022 to June 2022, and the recent slight downward trend, suggest a need for continued monitoring of cash management and current liability obligations.