Ligand Pharmaceuticals Incorporated (LGND)

Short-term

Turnover ratios

Ligand Pharmaceuticals Incorporated's activity ratios provide insights into how efficiently the company is managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover:
- The inventory turnover ratio indicates how many times a company sells and replaces its inventory during a specific period.
- Ligand Pharmaceuticals' inventory turnover has shown fluctuations over the years, with a significant increase from 2020 to 2023, followed by a decline in 2024.
- A higher inventory turnover generally signifies that the company is selling goods quickly and effectively managing its inventory levels.

2. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company collects outstanding receivables from its customers.
- In this case, the data provided indicates that receivables turnover information is not available for the stated periods.
- A high receivables turnover ratio is usually preferred as it implies that the company is efficiently collecting payments from customers.

3. Payables Turnover:
- The payables turnover ratio assesses how well a company manages its accounts payable by measuring how quickly it pays its suppliers.
- Like receivables turnover, there is no information available for Ligand Pharmaceuticals' payables turnover for the given periods.
- A higher payables turnover ratio typically suggests that the company is effectively managing its payables and thus improving its cash flow.

4. Working Capital Turnover:
- The working capital turnover ratio evaluates how efficiently a company generates revenue relative to its working capital.
- Ligand Pharmaceuticals' working capital turnover has varied over the years, with a notable increase in 2022 followed by a decline in subsequent years.
- A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales.

Overall, analyzing these activity ratios provides valuable insights into Ligand Pharmaceuticals' operational efficiency and effectiveness in managing its resources and working capital to drive business performance.

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Average number of days

Based on the provided data, we can analyze the activity ratios of Ligand Pharmaceuticals Incorporated as follows:

1. Days of Inventory on Hand (DOH):
- In December 2020, Ligand Pharmaceuticals had a high DOH of 317.82 days, indicating that the company held its inventory for a relatively long period.
- By December 2024, the DOH had increased significantly to 465.20 days, suggesting a potential inefficiency in managing inventory levels.

2. Days of Sales Outstanding (DSO):
- The data does not provide information on DSO for Ligand Pharmaceuticals across the years, which makes it challenging to assess the efficiency of the company in collecting receivables.

3. Number of Days of Payables:
- Similar to DSO, there is no data available for the number of days of payables for Ligand Pharmaceuticals. Hence, it is not possible to evaluate the company's payment practices to suppliers.

In conclusion, the analysis of the activity ratios for Ligand Pharmaceuticals Incorporated based on the provided data shows a concerning trend of increasing days of inventory on hand, highlighting a potential need for the company to focus on optimizing inventory management practices to improve operational efficiency.

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Long-term

The fixed asset turnover ratio for Ligand Pharmaceuticals Incorporated has shown a decreasing trend over the years, from 12.92 in 2020 to 7.14 in 2022. This indicates that the company is utilizing its fixed assets less efficiently to generate revenue. The decreasing ratio suggests that either the company has not been able to generate proportionate sales with its fixed assets or that its fixed asset base has increased faster than its revenue.

In contrast, the total asset turnover ratio has fluctuated over the same period, increasing from 0.14 in 2020 to 0.26 in 2022, before decreasing to 0.18 in 2024. This ratio measures how effectively the company is using its total assets to generate sales. The fluctuation in this ratio suggests varying levels of efficiency in asset utilization over the years.

Overall, the decreasing trend in the fixed asset turnover ratio and the fluctuating total asset turnover ratio indicate that Ligand Pharmaceuticals may need to review its asset management strategies to improve efficiency in generating sales with its assets. The company should focus on optimizing the utilization of both fixed and total assets to enhance overall operational performance and profitability.