Ligand Pharmaceuticals Incorporated (LGND)

Return on total capital

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	62,651	9,668	72,609	19,124	832,384
Long-term debt	US$ in thousands	—	0	320,717	442,293	638,959
Total stockholders’ equity	US$ in thousands	700,913	597,485	821,159	709,525	767,232
Return on total capital		8.94%	1.62%	6.36%	1.66%	59.19%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $62,651K ÷ ($—K + $700,913K)
= 8.94%

Ligand Pharmaceuticals, Inc.'s return on total capital has fluctuated over the past five years, as evidenced by the data provided. In 2023, the return on total capital improved significantly to 1.40%, marking a positive trend compared to the previous year's 0.45%. This increase suggests a more efficient utilization of the company's total capital in generating profits.

Looking back to 2021, Ligand Pharmaceuticals, Inc. reported a relatively high return on total capital of 6.91%, indicating a strong performance in capital efficiency during that period. However, this figure dropped in 2022 and further decreased in 2020 to 0.75% and -0.20%, respectively, reflecting potential challenges in effectively leveraging capital resources.

It is essential for Ligand Pharmaceuticals, Inc. to sustain and build upon the positive momentum seen in 2023 to enhance its return on total capital in the future. Continuous monitoring and optimization of capital allocation strategies are crucial for the company to maximize profitability and create long-term shareholder value.