Ligand Pharmaceuticals Incorporated (LGND)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	5,555	64,316	11,013	91,824	41,086
Interest expense	US$ in thousands	3,037	656	1,799	18,740	27,420
Interest coverage		1.83	98.04	6.12	4.90	1.50

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $5,555K ÷ $3,037K
= 1.83

Ligand Pharmaceuticals Incorporated's interest coverage has shown significant fluctuations over the analyzed period. As of December 31, 2020, the interest coverage ratio was 1.50, indicating that the company's ability to cover its interest expenses with its operating income was relatively low.

However, there was a notable improvement in the interest coverage ratio to 4.90 as of December 31, 2021, suggesting a better ability to meet its interest obligations from operating earnings. This trend continued positively in the following years, with the interest coverage ratios increasing to 6.12 as of December 31, 2022, and a substantial jump to 98.04 as of December 31, 2023, reflecting a significant strengthening of the company's ability to cover its interest expenses multiple times over with its operating income.

It is worth noting that there was a decrease in the interest coverage ratio to 1.83 as of December 31, 2024, which may raise some concerns about the company's ability to cover its interest payments with its operating earnings.

In conclusion, while Ligand Pharmaceuticals Incorporated has shown improvements in its interest coverage over the years, the substantial fluctuations in the ratio warrant further monitoring to ensure the company's financial health and ability to meet its debt obligations.