Ligand Pharmaceuticals Incorporated (LGND)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	97,156	158,189	214,026	141,696	86,995
Payables	US$ in thousands	2,427	5,307	8,403	3,784	2,420
Payables turnover		40.03	29.81	25.47	37.45	35.95

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $97,156K ÷ $2,427K
= 40.03

The payables turnover ratio measures how efficiently a company is managing its accounts payable by analyzing how many times a company pays off its average accounts payable balance during a specific period.

Looking at Ligand Pharmaceuticals, Inc.'s payables turnover over the past five years, we observe fluctuations in the ratio. In 2023, the payables turnover ratio was 4.33, which decreased significantly compared to 2022 when it was 9.95. This marked decrease could indicate that Ligand Pharmaceuticals took longer to pay off its suppliers in 2023 compared to the previous year.

While the payables turnover increased from 2020 to 2022, suggesting improved efficiency in managing payables during this period, the decrease in 2023 is a point of concern. It is essential to investigate the reasons behind this significant drop and assess whether it is a one-time occurrence or part of a broader trend.

Overall, a thorough analysis of the payables turnover ratio for Ligand Pharmaceuticals, Inc. indicates fluctuations in the company's ability to manage its accounts payable efficiently over the past five years, highlighting the importance of closely monitoring this metric to ensure optimal financial health and supplier relationships.