Ligand Pharmaceuticals Incorporated (LGND)

Working capital turnover

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Revenue (ttm) US$ in thousands 170,010 192,291 223,059 237,358 219,555 225,577 224,017 280,928 278,971 292,557 263,940 185,255 166,048 123,061 103,297 84,365 93,671 117,133 135,781 196,095
Total current assets US$ in thousands 237,429 253,994 276,711 328,195 263,601 220,432 243,784 276,066 464,751 432,082 410,901 437,428 500,559 857,741 863,624 830,727 1,123,640 1,183,100 1,442,310 1,567,900
Total current liabilities US$ in thousands 16,782 15,727 29,388 98,929 98,810 135,241 167,853 42,578 41,665 36,297 52,497 95,805 100,111 42,300 29,264 20,438 17,002 35,695 108,985 186,777
Working capital turnover 0.77 0.81 0.90 1.04 1.33 2.65 2.95 1.20 0.66 0.74 0.74 0.54 0.41 0.15 0.12 0.10 0.08 0.10 0.10 0.14

December 31, 2023 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $170,010K ÷ ($237,429K – $16,782K)
= 0.77

Working capital turnover is a measure of how efficiently a company utilizes its working capital to generate sales revenue. A higher working capital turnover ratio indicates that the company is effectively using its current assets to support its sales activities.

For Ligand Pharmaceuticals, Inc., the working capital turnover ratio has shown a declining trend over the past quarters, indicating a decrease in efficiency in utilizing its working capital. In Q4 2023, the working capital turnover was 0.60, down from 0.85 in Q1 2023 and significantly lower than the ratio of 1.19 in Q4 2022.

The sharp decline in the working capital turnover ratio from Q2 2022 to Q1 2023 suggests a deterioration in the company's ability to convert its working capital into sales during that period. Additionally, the ratios in Q3 and Q4 2023 indicate further challenges in achieving efficient working capital management.

It is essential for Ligand Pharmaceuticals to monitor and improve its working capital turnover ratio to ensure optimal utilization of its resources and enhance overall operational efficiency. By focusing on more effective management of current assets and liabilities, the company can potentially increase its working capital turnover and drive better financial performance in the future.