Ligand Pharmaceuticals Incorporated (LGND)

Interest coverage

		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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	62,651	66,852	82,440	74,590	9,668	-8,631	7,622	50,201	72,608	79,233	54,192	50,340	16,877	7,781	2,246	-41,102	832,384	795,079	896,383	1,014,432
Interest expense (ttm)	US$ in thousands	656	765	1,096	1,250	1,799	6,024	10,131	14,576	19,618	21,538	23,368	24,698	27,415	29,864	32,588	35,387	35,745	47,054	49,261	53,703
Interest coverage		95.50	87.39	75.22	59.67	5.37	-1.43	0.75	3.44	3.70	3.68	2.32	2.04	0.62	0.26	0.07	-1.16	23.29	16.90	18.20	18.89

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $62,651K ÷ $656K
= 95.50

Interest coverage is a financial ratio that indicates a company's ability to cover its interest expenses with its operating income. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

In the case of Ligand Pharmaceuticals, Inc., the interest coverage ratio was not available for the most recent quarters, Q4 2023, Q3 2023, Q2 2023, and Q1 2023. However, for the previous quarters, the interest coverage ratios were as follows: -4.20 (Q4 2022), -0.25 (Q3 2022), 2.81 (Q2 2022), and N/A (Q1 2022).

A negative interest coverage ratio, as seen in Q4 2022 and Q3 2022, indicates that the company's operating income was insufficient to cover its interest expenses. This is a concerning sign as it suggests that Ligand Pharmaceuticals may have financial difficulty meeting its debt obligations.

The improvement in the interest coverage ratio in Q2 2022 to 2.81 is a positive development, indicating that the company's operating income became more sufficient to cover its interest expenses. However, it is important to note that a ratio below 1.0 generally suggests that the company is not generating enough operating income to meet its interest payments.

Overall, it is essential for investors and stakeholders to closely monitor Ligand Pharmaceuticals, Inc.'s interest coverage ratio in future periods to assess the company's financial health and ability to meet its debt obligations.