Ironwood Pharmaceuticals Inc (IRWD)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	421,125	403,178	381,332	353,446	366,965
Total current assets	US$ in thousands	233,288	780,626	745,225	495,839	306,852
Total current liabilities	US$ in thousands	276,101	25,525	161,698	32,173	40,929
Working capital turnover		—	0.53	0.65	0.76	1.38

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $421,125K ÷ ($233,288K – $276,101K)
= —

The working capital turnover ratio for Ironwood Pharmaceuticals Inc has shown a declining trend over the past five years. In 2019, the ratio was relatively high at 1.61, indicating that the company was generating $1.61 in revenue for every dollar of working capital invested. However, there has been a significant decrease in this ratio in the subsequent years, with values of 0.84 in 2020, 0.71 in 2021, and 0.54 in 2022.

This declining trend suggests that the company's efficiency in utilizing its working capital to generate revenue has deteriorated over time. A lower working capital turnover ratio could be an indication of inefficiencies in managing inventory, collecting receivables, or paying off short-term obligations. It may also point to potential liquidity issues or operational inefficiencies within the company.

In conclusion, the declining trend in Ironwood Pharmaceuticals Inc's working capital turnover ratio raises concerns about the company's operational performance and its ability to efficiently utilize its working capital to generate revenue. Further analysis and investigation into the company's working capital management practices may be necessary to improve its financial performance.