Ligand Pharmaceuticals Incorporated (LGND)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-105,302	-49,757	-56,049	11,528	13,178	20,330	44,814	41,161	38,656	11,722	11,287	23,124	25,706	43,056	25,807	21,268	-5,201	-19,338	-27,697	-45,800
Interest expense (ttm)	US$ in thousands	3,033	2,281	1,541	2,309	3,363	3,233	3,564	1,966	1,426	5,709	9,816	14,261	19,437	21,543	22,382	21,743	24,460	26,904	30,619	35,387
Interest coverage		-34.72	-21.81	-36.37	4.99	3.92	6.29	12.57	20.94	27.11	2.05	1.15	1.62	1.32	2.00	1.15	0.98	-0.21	-0.72	-0.90	-1.29

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $-105,302K ÷ $3,033K
= -34.72

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Looking at the data provided for Ligand Pharmaceuticals Incorporated, the interest coverage ratio has shown significant fluctuations over the periods. The company had negative interest coverage ratios in the earlier part of the dataset, suggesting that its EBIT was not sufficient to cover its interest expenses.

From March 31, 2021, to June 30, 2022, the interest coverage ratios improved steadily, indicating an enhancement in the company's ability to cover its interest payments. However, there were fluctuations in the ratios during this period, indicating some variability in the company's financial performance.

Notably, in the latter part of the dataset, the interest coverage ratio experienced a drastic increase from December 31, 2022, to March 31, 2024, with significantly high ratios at the end of this period. The very high ratios in the final dates, namely June 30, 2024, to December 31, 2024, could be due to a combination of increased EBIT and potentially lower interest expenses.

Overall, the interest coverage analysis suggests that Ligand Pharmaceuticals Incorporated experienced fluctuations in its ability to cover interest payments throughout the dataset, with notable improvements in the later periods. It is essential for stakeholders to monitor this ratio closely to assess the company's financial health and debt servicing capabilities.