Ligand Pharmaceuticals Incorporated (LGND)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	11,074	35,049	52,827	62,176	30,419
Inventory	US$ in thousands	14,114	23,969	13,294	27,326	26,487
Inventory turnover		0.78	1.46	3.97	2.28	1.15

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $11,074K ÷ $14,114K
= 0.78

Inventory turnover is a key financial ratio that indicates how efficiently a company is managing its inventory. In the case of Ligand Pharmaceuticals Incorporated, the inventory turnover has shown fluctuations over the past five years.

In 2020, the inventory turnover ratio was 1.15, indicating that the company turned over its inventory 1.15 times during the year. This suggests that the company may have had slower inventory management efficiency in that year.

By 2021, the inventory turnover ratio improved to 2.28, indicating a significant increase in the efficiency of managing inventory. This improvement suggests that Ligand Pharmaceuticals may have streamlined its inventory processes and reduced excess inventory levels.

In 2022, the inventory turnover ratio further increased to 3.97, reflecting even better inventory management efficiency. A high inventory turnover ratio typically indicates that a company is selling its products quickly and replenishing its inventory efficiently.

However, in 2023, the inventory turnover ratio dropped to 1.46, indicating a decline in inventory management efficiency compared to the previous year. This could be a signal that the company may have experienced challenges in sales or production during that period.

In the most recent year, 2024, the inventory turnover ratio decreased significantly to 0.78, suggesting a notable slowdown in inventory turnover. A low inventory turnover ratio may indicate excess inventory levels or difficulties in selling products in a timely manner.

Overall, an analysis of the inventory turnover ratios of Ligand Pharmaceuticals over the past five years reveals fluctuations in inventory management efficiency. It is important for the company to monitor and improve its inventory turnover to ensure optimal use of resources and maintain healthy operational performance.