Keurig Dr Pepper Inc. (NASDAQ:KDP)

Inventory Turnover

The inventory turnover ratio increased significantly from 5.69 in 2018 to 7.31 in 2019, indicating improved efficiency in managing inventory. However, it slightly declined in the following years, reaching 6.38 in 2021, suggesting a moderate reduction in the pace at which inventory is sold.

Receivables Turnover

Receivables turnover showed a consistent upward trend, rising from 6.47 in 2018 to around 11.05 by 2021. This increase implies improved effectiveness in collecting receivables and suggests shorter credit periods granted to customers.

Payables Turnover

Payables turnover decreased steadily from 1.55 in 2018 to 1.32 in 2021. The reduction indicates a lengthening of the payment cycle to suppliers, potentially reflecting extended credit terms or more cautious cash disbursement management.

Average Inventory Processing Period

The average inventory processing period decreased from 64 days in 2018 to 50 days in 2019, reflecting faster turnover. Subsequently, it lengthened slightly to 54 days in 2020 and 57 days in 2021, suggesting some easing in inventory management speed but remaining below the initial 2018 level.

Average Receivable Collection Period

This period significantly shortened from 56 days in 2018 to 33 days by 2020, maintaining the same level in 2021. This trend shows marked improvement in the speed of receivables collection, contributing positively to liquidity.

Operating Cycle

The operating cycle contracted sharply from 120 days in 2018 to 87 days in 2019 and remained stable through 2020. A slight increase to 90 days occurred in 2021. Overall, the operating cycle improved considerably, indicating more efficient management of inventory and receivables combined.

Average Payables Payment Period

The average payables payment period extended steadily from 236 days in 2018 to 276 days in 2021. This elongation indicates that the company is taking longer to pay its suppliers, which can be a cash management strategy to preserve liquidity but may affect supplier relationships.

Cash Conversion Cycle

The cash conversion cycle was negative throughout the period, suggesting that the company receives cash from customers before it needs to pay suppliers. Notably, the cycle improved from -116 days in 2018 to -186 days in 2021, demonstrating enhanced working capital efficiency and a strong cash flow position.

The data reveals significant upward trends in both cost of sales and inventories over the four-year period under consideration. Cost of sales has shown consistent annual growth, increasing from 3,560 million US dollars in 2018 to 5,706 million US dollars by the end of 2021. This represents a notable rise, indicative of expanded operational activity or increased input costs.

Inventories have also expanded steadily, moving from 626 million US dollars in 2018 to 894 million US dollars in 2021. This growth may suggest an accumulation of stock potentially in anticipation of higher sales volumes or changes in supply chain dynamics.

Inventory Turnover Ratio

The inventory turnover ratio experienced fluctuations during the period. It increased sharply from 5.69 in 2018 to 7.31 in 2019, indicating improved efficiency in managing inventory relative to sales for that year. However, in subsequent years, the ratio declined to 6.73 in 2020 and further to 6.38 in 2021. The downward trend after 2019 might imply a slower movement of inventory, possibly due to higher inventory levels outpacing sales growth or other operational factors affecting stock utilization.

Overall, the patterns display expanding business scale with rising costs and inventory holdings. The inventory management efficiency peaked in 2019 but diminished slightly thereafter. Monitoring and managing the balance between inventory accumulation and turnover rates will be crucial to maintaining operational effectiveness going forward.

The financial data indicates significant growth in net sales over the four-year period. Net sales increased from $7,442 million in 2018 to $12,683 million in 2021, demonstrating a steady upward trend with an overall increase exceeding 70%. This suggests improved market demand or expanded business operations during these years.

Trade accounts receivable, net, exhibited a slight decline from $1,150 million in 2018 to $1,048 million in 2020, followed by a moderate recovery to $1,148 million in 2021. Despite this fluctuation, the receivables remained relatively stable over the period, indicating consistent credit sales policies or effective collection efforts.

The receivables turnover ratio showed a notable upward trend from 6.47 in 2018 to 11.09 in 2020, with a minor decrease to 11.05 in 2021. This increase suggests faster collection cycles and improved efficiency in managing receivables. Higher turnover ratios are typically indicative of tighter credit controls or faster customer payments, contributing positively to cash flow management.

Net Sales

Increased consistently, highlighting strong revenue growth and potential market expansion.

Trade Accounts Receivable, Net

Relatively stable with minor fluctuations, reflecting consistent credit policies and collection practices.

Receivables Turnover

Improved substantially, indicating enhanced efficiency in collecting receivables and better cash flow management.

Cost of Sales

The cost of sales exhibited a consistent increase over the observed periods. Starting at $3,560 million in 2018, it rose significantly to $4,778 million in 2019, followed by continued growth to $5,132 million in 2020, and further reaching $5,706 million by the end of 2021. This upward trajectory suggests increased production costs or higher sales volumes impacting cost structures.

Accounts Payable

Accounts payable showed a similar rising trend, increasing from $2,300 million in 2018 to $3,176 million in 2019, then to $3,740 million in 2020, and further to $4,316 million in 2021. This indicates a growth in the company's outstanding obligations, possibly reflecting extended credit terms from suppliers or increased purchasing activities aligned with the rising cost of sales.

Payables Turnover Ratio

The payables turnover ratio decreased steadily from 1.55 in 2018 to 1.5 in 2019, then to 1.37 in 2020, and finally to 1.32 in 2021. This decline indicates the company is taking longer to settle its payables relative to its cost of sales. The lower turnover could suggest improved cash management practices by leveraging supplier credit or potential delays in payments.

The financial data for the periods ending December 31 from 2018 to 2021 reveals several notable trends related to working capital and net sales.

Working Capital

Working capital figures are consistently negative throughout the four-year period, indicating that current liabilities exceed current assets each year. The negative working capital deepened from -3,543 million US dollars in 2018 to -5,306 million US dollars by the end of 2020, representing an increasing shortfall in net current assets. However, by 2021, this trend reversed somewhat, with working capital improving to -3,428 million US dollars. This improvement suggests a partial recovery in liquidity or better management of current assets and liabilities, though the figure remains negative overall.

Net Sales

Net sales show a strong upward trajectory over the four-year span. Revenue increased significantly from 7,442 million US dollars in 2018 to 11,120 million in 2019, marking a substantial growth of nearly 50%. This positive momentum continued more moderately in subsequent years, with net sales reaching 11,618 million in 2020 and further increasing to 12,683 million by 2021. This consistent sales growth indicates expanding market presence or improved sales performance during this period.

Working Capital Turnover

Data for the working capital turnover ratio is not provided, limiting the ability to analyze the efficiency with which working capital is used to generate sales. This metric would have been useful to assess operational performance relative to the working capital levels.

In summary, the company experienced robust net sales growth over the four years, while managing a persistently negative but improving working capital position in 2021. The improvement in working capital after a worsening trend through 2020 may reflect efforts to optimize liquidity or current asset management amid rising sales volumes.

The financial data reveals notable trends in inventory management over the four-year period ending in 2021. There is a clear improvement in inventory turnover from 2018 to 2019, where the ratio increased significantly from 5.69 to 7.31. This indicates that inventory was sold and replaced more frequently in 2019 compared to the prior year.

However, after 2019, the inventory turnover ratio demonstrates a declining trend. It decreases from 7.31 in 2019 to 6.73 in 2020, and continues to decline further to 6.38 in 2021. This gradual reduction suggests that the efficiency in converting inventory into sales has weakened since its peak in 2019, although the turnover ratio remains higher than the 2018 level.

Corresponding to the inventory turnover pattern, the average inventory processing period exhibits an opposite trend. There is a notable reduction in the number of days inventory remains held from 64 days in 2018 to 50 days in 2019. This indicates that the company was able to reduce the time inventory was held before sale, contributing to the increased turnover in 2019.

Following 2019, the average inventory processing period increased to 54 days in 2020 and further to 57 days in 2021. This aligns with the observed decrease in inventory turnover, reflecting a longer duration for inventory processing in the latter years. Despite the increase, the processing period in 2021 remains lower than that recorded in 2018.

Overall, the data suggests an initial improvement in inventory efficiency up to 2019, followed by a gradual decline in subsequent years. The inventory turnover and processing period metrics are inversely related, as expected, and both point to slightly less efficient inventory management practices in 2020 and 2021 compared to the peak performance year of 2019, yet still better than 2018.

Receivables Turnover

The receivables turnover ratio demonstrates a significant upward trend over the analyzed period from 2018 to 2021. Starting at 6.47 in 2018, the ratio increases sharply to 9.97 in 2019, followed by continued growth to 11.09 in 2020. In 2021, it remains relatively stable at 11.05, indicating sustained improvement in the efficiency of collecting receivables.

Average Receivable Collection Period

The average receivable collection period shows a consistent decline, indicating quicker collection of outstanding receivables. It decreases from 56 days in 2018 to 37 days in 2019, followed by further reductions to 33 days in both 2020 and 2021. This reduction aligns with the increasing receivables turnover ratio and suggests enhanced management of credit and collection processes over time.

Overall Analysis

The observed improvements in both the receivables turnover ratio and the average collection period reflect enhanced operational efficiency related to accounts receivable. The company has been able to reduce the time customers take to pay, thereby potentially improving cash flow and reducing credit risk. The stabilization of the turnover ratio and collection period in the last two years suggests the company achieved a more optimized receivables management by 2020 that has been maintained through 2021.

The analysis of the available financial ratios over the four-year period reveals several key trends in the company's working capital management and operational efficiency.

Average Inventory Processing Period

The average inventory processing period decreased significantly from 64 days in 2018 to 50 days in 2019, indicating a faster turnover of inventory. However, in the subsequent years, the period slightly increased to 54 days in 2020 and to 57 days in 2021, suggesting a moderate slowdown in inventory turnover but still maintaining an improvement compared to 2018.

Average Receivable Collection Period

There was a notable improvement in receivable collection efficiency, with the period declining sharply from 56 days in 2018 to 37 days in 2019. This positive trend continued, albeit at a slower pace, to 33 days in 2020 and remained stable at 33 days in 2021. The stability in the latter years suggests consistent collection practices.

Operating Cycle

The operating cycle, representing the total time taken from inventory purchase to cash collection, showed a marked reduction from 120 days in 2018 to 87 days in 2019 and remained stable at 87 days in 2020. In 2021, there was a slight increase to 90 days, but this still reflects an overall improvement compared to the initial 2018 figure.

Overall, the data indicates enhanced efficiency in managing both inventory and receivables beginning in 2019, contributing to a shorter operating cycle. While there was some moderation in inventory processing speed after 2019, the company maintained improved receivables collection and a relatively stable operating cycle through 2021.

Payables Turnover

The payables turnover ratio demonstrates a declining trend over the four-year period. Starting at 1.55 in 2018, the ratio decreases gradually each year, reaching 1.32 by the end of 2021. This consistent reduction suggests the company is turning over its payables less frequently over time.

Average Payables Payment Period

The average payables payment period shows an upward trend, increasing from 236 days in 2018 to 276 days in 2021. This indicates the company is taking longer to settle its accounts payable, with the number of days extending progressively each year.

Overall Analysis

The inverse relationship between the payables turnover ratio and the average payables payment period is evident, with turnover decreasing and the payment period increasing simultaneously. This suggests a strategic shift toward longer payment terms or delayed payment to suppliers, which could impact the company's short-term liquidity and supplier relationships. The trends are consistent and uninterrupted, indicating a deliberate operational change rather than a one-time occurrence.

Average Inventory Processing Period

The average inventory processing period showed a decline from 64 days in 2018 to 50 days in 2019, indicating improved inventory turnover efficiency. However, it increased to 54 days in 2020 and further to 57 days in 2021, suggesting a slight deceleration in inventory management in the latter years.

Average Receivable Collection Period

There was a significant reduction in the average receivable collection period, dropping from 56 days in 2018 to 37 days in 2019, and then stabilizing at 33 days for both 2020 and 2021. This points to improved efficiency in collecting receivables.

Average Payables Payment Period

The average payables payment period exhibited an increasing trend, rising from 236 days in 2018 to 243 days in 2019, continuing upward to 266 days in 2020, and reaching 276 days in 2021. This indicates the company extended its payment terms to suppliers over the period.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout the period, with a downward trend from -116 days in 2018 to -156 days in 2019, and further to -179 days in 2020, reaching -186 days in 2021. The increasingly negative values reflect a strong cash flow position, partly due to the lengthening payables period more than offsetting the inventory and receivables periods.