PepsiCo Inc. (NASDAQ:PEP)

The financial metrics presented demonstrate varied trends over the five-year period. Generally, adjusted ratios exhibit slight differences from their reported counterparts, suggesting the impact of accounting adjustments on key performance indicators. Several ratios show cyclical behavior, while others indicate a more definitive directional shift.

Asset Turnover

Both the reported and adjusted total asset turnover ratios initially increased from 2021 to 2022, peaking at 0.94 and 0.98 respectively. A slight decline was then observed in 2023, followed by a stabilization in 2024. The most recent year, 2025, shows a further decrease, returning the ratios closer to their 2021 levels. The adjusted ratio consistently remains higher than the reported ratio, indicating that adjustments increase the efficiency with which assets are used to generate sales.

Liquidity

The reported and adjusted current ratios remained relatively stable throughout the period, fluctuating between 0.80 and 0.86. There is no clear upward or downward trend, suggesting consistent short-term liquidity. The adjusted current ratio is marginally higher than the reported ratio, implying that adjustments slightly improve the company’s ability to meet its short-term obligations.

Leverage

Reported debt to equity decreased from 2.51 in 2021 to 2.28 in 2022, then increased again, peaking at 2.65 in 2024 before decreasing slightly in 2025. The adjusted debt to equity ratio follows a similar pattern but consistently reports higher values, particularly in the later years. Reported debt to capital remained relatively stable around 0.70, while the adjusted ratio showed a slight increase. Reported financial leverage decreased initially, then increased, while the adjusted financial leverage mirrored this trend but at lower magnitudes. These trends suggest a fluctuating reliance on debt financing.

Profitability

Reported net profit margin increased from 9.59% in 2021 to 10.43% in 2024, then decreased significantly to 8.77% in 2025. Conversely, the adjusted net profit margin initially decreased from 10.81% to 9.27% before increasing substantially to 11.44% in 2025. This divergence highlights the significant impact of adjustments on reported profitability. The adjusted net profit margin demonstrates greater volatility than the reported margin.

Returns

Reported return on equity (ROE) peaked in 2024 at 53.09% before declining to 40.38% in 2025. The adjusted ROE exhibited a similar pattern, though with different magnitudes. Reported return on assets (ROA) also peaked in 2024 at 9.63%, followed by a decrease to 7.67% in 2025. The adjusted ROA showed a similar trend, with a peak in 2021 and a decline in the final year, but the magnitude of change differed. The adjustments generally lead to lower ROE and ROA values in the earlier years, but higher values in the later years.

In summary, the adjusted ratios provide a different perspective on the company’s financial performance compared to the reported figures. The adjustments appear to have a notable impact on profitability and returns, particularly in the later years of the observed period. Leverage ratios show a fluctuating trend, while liquidity remains relatively stable. Asset turnover demonstrates a cyclical pattern.

The analysis reveals a generally stable, yet subtly shifting, performance in asset utilization over the five-year period. Net revenue demonstrates consistent growth, while total assets fluctuate. A comparison of reported and adjusted total asset turnover ratios suggests the impact of specific asset adjustments on the overall efficiency metric.

Net Revenue

Net revenue exhibits a consistent upward trend, increasing from US$79,474 million in 2021 to US$93,925 million in 2025. The growth is not linear, with a more substantial increase between 2021 and 2022, followed by more moderate gains in subsequent years. This indicates a sustained ability to generate sales.

Total Assets

Total assets show less consistent behavior. They decreased slightly from 2021 to 2022, then increased significantly in 2023, before decreasing again in 2024. A further increase is observed in 2025, reaching US$107,399 million. This volatility suggests potential changes in investment strategies or asset composition.

Reported Total Asset Turnover

The reported total asset turnover ratio initially increased from 0.86 in 2021 to 0.94 in 2022, then declined to 0.91 in 2023 and remained relatively stable at 0.92 in 2024. A slight decrease to 0.87 is observed in 2025. This suggests a fluctuating efficiency in generating revenue from its asset base.

Adjusted Total Assets

Adjusted total assets follow a similar pattern to total assets, but with slightly different magnitudes. The adjustments appear to moderate the fluctuations observed in the reported total assets. The adjusted figures also show an overall increasing trend from US$88,214 million in 2021 to US$103,088 million in 2025.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio demonstrates a more consistent upward trend than the reported ratio, increasing from 0.90 in 2021 to a peak of 0.98 in 2022. It then stabilizes around 0.95-0.96 in 2023 and 2024, before decreasing slightly to 0.91 in 2025. The higher and more stable values of the adjusted ratio, compared to the reported ratio, indicate that the asset adjustments positively influence the perceived efficiency of asset utilization. The slight decline in 2025 warrants further investigation.

In conclusion, while revenue consistently increased, asset management appears dynamic. The adjustments to total assets result in a more favorable asset turnover ratio, suggesting that the adjustments reflect a more accurate representation of the assets contributing to revenue generation. The slight decrease in both reported and adjusted turnover in 2025 could indicate emerging inefficiencies or a shift in asset allocation strategy.

The reported and adjusted current ratios exhibit similar patterns over the five-year period. Both ratios fluctuate around the 0.80-0.86 range, indicating a relatively consistent, though somewhat constrained, ability to cover short-term liabilities with short-term assets. A slight overall improvement is observed in the most recent year presented.

Current Asset Trends

Current assets demonstrate an initial decrease between 2021 and 2022, followed by a substantial increase in 2023. This increase is partially offset by a decrease in 2024, with a subsequent recovery and further increase in 2025. The volatility suggests potential shifts in working capital management or seasonal influences.

Current Liability Trends

Current liabilities consistently increased throughout the period, though the rate of increase appears to moderate in 2024 and 2025. This steady rise in short-term obligations contributes to the pressure on the current ratios.

Reported Current Ratio Analysis

The reported current ratio decreased from 0.83 in 2021 to 0.80 in 2022, then increased to 0.85 in 2023, decreased slightly to 0.82 in 2024, and finally increased to 0.85 in 2025. These fluctuations mirror the trends in current assets and liabilities.

Adjusted Current Ratio Analysis

The adjusted current ratio follows a similar trajectory to the reported current ratio, beginning at 0.84 in 2021, decreasing to 0.81 in 2022, increasing to 0.86 in 2023, decreasing to 0.83 in 2024, and increasing to 0.86 in 2025. The adjustments to current assets appear to have a minimal impact on the overall trend, maintaining a close correlation with the reported ratio.

The consistent proximity of the reported and adjusted current ratios suggests that the adjustments made to current assets are not materially altering the overall assessment of short-term liquidity. The slight upward trend in both ratios in the final year indicates a potential strengthening of the short-term financial position.

The adjusted debt to equity ratio for the period demonstrates a generally increasing trend, with some fluctuation. Total debt exhibits an overall upward trajectory, while total shareholders’ equity also increases, though at a varying pace. The adjusted figures, which presumably incorporate additional debt considerations not reflected in the reported values, present a slightly different picture than the reported debt to equity ratio.

Adjusted Debt to Equity Ratio - Overall Trend

The adjusted debt to equity ratio begins at 2.51 in 2021 and fluctuates over the five-year period, reaching 2.65 in 2024 before decreasing slightly to 2.60 in 2025. This indicates a gradual increase in financial leverage, as measured by adjusted debt relative to adjusted equity, over the analyzed timeframe.

Debt and Equity Components

Adjusted total debt increases consistently from US$42,378 million in 2021 to US$53,028 million in 2025. Adjusted total equity also shows growth, moving from US$16,885 million in 2021 to US$20,364 million in 2025. However, the rate of increase in debt consistently exceeds that of equity, contributing to the observed rise in the adjusted debt to equity ratio.

Comparison to Reported Debt to Equity

While the reported debt to equity ratio also shows some fluctuation, it remains relatively stable, ranging from 2.28 to 2.51. The adjusted ratio consistently exceeds the reported ratio throughout the period, suggesting that the adjustments made to total debt and equity significantly impact the leverage assessment. The difference between the reported and adjusted ratios widens slightly over time, indicating a growing divergence in how leverage is perceived when considering these adjustments.

The consistent increase in adjusted total debt, coupled with a comparatively slower growth in adjusted total equity, suggests a reliance on debt financing. The increasing adjusted debt to equity ratio warrants further investigation to understand the nature of the debt adjustments and their implications for the company’s financial risk profile.

Over the five-year period examined, both total debt and total capital exhibited an overall increasing trend. However, the adjusted figures demonstrate a slightly different magnitude of change. The adjusted debt to capital ratio remained relatively stable, fluctuating within a narrow range, indicating a consistent capital structure from a leverage perspective.

Total Debt and Total Capital

Total debt increased from US$40,334 million in 2021 to US$49,182 million in 2025. Total capital followed a similar trajectory, rising from US$56,377 million to US$69,588 million over the same period. The increases were not linear, with a slight decrease in both metrics observed between 2021 and 2022.

Reported Debt to Capital Ratio

The reported debt to capital ratio showed minimal variation, holding steady around 0.71 throughout the period. It began at 0.72 in 2021, decreased to 0.69 in 2022, and then fluctuated between 0.70 and 0.72 for the remaining years. This suggests a consistent reliance on debt financing relative to capital.

Adjusted Total Debt and Total Capital

Adjusted total debt increased from US$42,378 million in 2021 to US$53,028 million in 2025. Adjusted total capital increased from US$59,263 million to US$73,392 million over the same timeframe. The adjusted figures consistently show higher values than the reported figures for both debt and capital.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio demonstrated a high degree of stability. Starting at 0.72 in 2021, it decreased to 0.70 in 2022, then increased to 0.73 in 2024 before settling back to 0.72 in 2025. The ratio remained within a tight band, indicating that adjustments to debt and capital calculations did not significantly alter the overall leverage profile. The consistency suggests a deliberate approach to maintaining a specific capital structure.

In summary, while absolute levels of debt and capital increased, the adjusted debt to capital ratio remained remarkably consistent, suggesting a stable financial leverage position throughout the analyzed period.

The financial leverage metrics demonstrate a generally stable profile over the five-year period, with some subtle shifts observable when comparing reported and adjusted figures. Total assets experienced fluctuations, increasing from 92,377 US$ millions in 2021 to 107,399 US$ millions in 2025, with a slight dip in 2024. Similarly, total PepsiCo common shareholders’ equity exhibited an upward trend, rising from 16,043 US$ millions in 2021 to 20,406 US$ millions in 2025.

Reported Financial Leverage

Reported financial leverage decreased from 5.76 in 2021 to 5.38 in 2022, then stabilized around the 5.4 to 5.5 range for 2023 and 2024, before decreasing again to 5.26 in 2025. This suggests a modest reduction in the proportion of assets financed by equity over the period, followed by relative stability, and then a further decrease.

Adjusted Total Assets and Equity

Adjusted total assets followed a similar pattern to reported total assets, increasing from 88,214 US$ millions in 2021 to 103,088 US$ millions in 2025, with a minor decrease in 2024. Adjusted total equity also increased, moving from 16,885 US$ millions in 2021 to 20,364 US$ millions in 2025.

Adjusted Financial Leverage

Adjusted financial leverage showed a decrease from 5.22 in 2021 to 5.02 in 2022, a slight increase to 5.22 in 2023, a further increase to 5.30 in 2024, and then a decrease to 5.06 in 2025. The adjusted leverage ratio consistently remained lower than the reported leverage ratio across all observed years. This indicates that adjustments to the asset and equity base result in a more conservative leverage position. The fluctuations suggest a sensitivity to the specific adjustments made, with the largest difference between reported and adjusted leverage occurring in 2021 and 2022.

The convergence of reported and adjusted leverage ratios in later years suggests a diminishing impact from the adjustments applied. Overall, the company maintains a relatively stable financial leverage position, with the adjusted metrics providing a slightly more conservative view of its capital structure.

The adjusted net profit margin exhibited fluctuations over the five-year period. While net income attributable to PepsiCo and net revenue generally increased from 2021 to 2023, the adjusted net profit margin presented a more complex pattern.

Overall Trend

The adjusted net profit margin began at 10.81% in 2021, decreased to 9.27% in 2022, and experienced a slight increase to 9.37% in 2023. A more substantial decline was observed in 2024, falling to 8.19%. The final year, 2025, showed a significant recovery, with the adjusted net profit margin rising to 11.44%.

Year-over-Year Changes

From 2021 to 2022, the adjusted net profit margin decreased by 1.54 percentage points. The subsequent year saw a modest increase of 0.10 percentage points. The largest year-over-year decrease occurred between 2023 and 2024, with a drop of 1.18 percentage points. Conversely, the most significant increase was from 2024 to 2025, representing a 3.25 percentage point improvement.

Comparison with Reported Net Profit Margin

The adjusted net profit margin consistently differed from the reported net profit margin throughout the period. The adjusted figures generally started higher than the reported figures in 2021 and 2022, but the difference narrowed in 2023. In 2024, the adjusted margin fell below the reported margin, and this trend reversed in 2025, with the adjusted margin exceeding the reported margin by a substantial margin.

The considerable increase in adjusted net profit margin in 2025, coupled with the decline in 2024, warrants further investigation to understand the underlying factors driving these changes. The fluctuations suggest that adjustments to net income have a material impact on profitability as measured by this metric.

The adjusted return on equity (ROE) exhibited fluctuations over the five-year period. While net income attributable to PepsiCo and total PepsiCo common shareholders’ equity generally increased from 2021 to 2023, the adjusted figures present a slightly different picture, impacting the adjusted ROE calculation.

Adjusted ROE Trend

The adjusted ROE began at 50.86% in 2021, decreased to 45.65% in 2022, and then modestly increased to 46.49% in 2023. A further decline was observed in 2024, with the adjusted ROE falling to 41.76%. A significant increase occurred in 2025, bringing the adjusted ROE to 52.76%.

Relationship to Adjusted Net Income

Adjusted net income decreased from US$8,588 million in 2021 to US$8,011 million in 2022, contributing to the initial decline in adjusted ROE. It then rose to US$8,568 million in 2023 before decreasing again to US$7,522 million in 2024. The substantial increase in adjusted net income to US$10,744 million in 2025 appears to be the primary driver of the significant increase in adjusted ROE during that year.

Relationship to Adjusted Total Equity

Adjusted total equity showed a consistent upward trend, increasing from US$16,885 million in 2021 to US$20,364 million in 2025. However, the rate of increase varied. The growth in adjusted total equity was relatively stable between 2021 and 2024, with a more pronounced increase observed between 2024 and 2025. This growth in equity partially offset the impact of fluctuations in adjusted net income on the adjusted ROE.

Comparison to Reported ROE

The reported ROE generally tracked a similar pattern to the adjusted ROE, though with differing magnitudes. The reported ROE peaked at 53.09% in 2024, while the adjusted ROE was at its lowest point during the same period. This suggests that the adjustments made to net income and total equity have a material impact on the calculated return on equity.

The considerable increase in adjusted ROE in 2025, driven by a substantial rise in adjusted net income, warrants further investigation to understand the underlying factors contributing to this change. The differences between reported and adjusted ROE highlight the importance of considering the adjustments made when evaluating the company’s profitability relative to shareholder equity.

The adjusted return on assets (ROA) exhibited fluctuations over the five-year period. While initially strong, the metric experienced a decline before recovering significantly in the final year examined. A detailed examination of the components and the resulting adjusted ROA is presented below.

Adjusted ROA Trend

The adjusted ROA began at 9.74% in 2021, decreased to 9.09% in 2022, and continued to decline to 8.91% in 2023. A further decrease was observed in 2024, with the adjusted ROA falling to 7.88%. However, a substantial increase occurred in 2025, reaching 10.42%. This represents the highest adjusted ROA value within the observed timeframe.

Adjusted Net Income Influence

Adjusted net income demonstrated variability. It decreased from US$8,588 million in 2021 to US$8,011 million in 2022, then increased to US$8,568 million in 2023. A decline to US$7,522 million was noted in 2024, followed by a significant surge to US$10,744 million in 2025. This substantial increase in adjusted net income in 2025 likely contributed significantly to the corresponding rise in adjusted ROA.

Adjusted Total Assets Influence

Adjusted total assets generally increased throughout the period. Beginning at US$88,214 million in 2021, they rose to US$88,133 million in 2022, then to US$96,196 million in 2023. A slight decrease to US$95,461 million occurred in 2024, before increasing to US$103,088 million in 2025. The growth in adjusted total assets, while generally positive, did not consistently align with the fluctuations in adjusted net income, indicating that profitability changes had a more pronounced effect on the adjusted ROA.

Comparison to Reported ROA

The adjusted ROA consistently differed from the reported ROA. The adjusted ROA was higher than the reported ROA in 2021, 2022, and 2023, but lower in 2024 and 2025. The magnitude of the difference varied year to year, suggesting the adjustments made to net income and total assets had a material impact on the overall return assessment. The largest divergence occurred in 2025, where the adjusted ROA significantly exceeded the reported ROA.

In summary, the adjusted ROA experienced a period of decline followed by a strong recovery, largely driven by a substantial increase in adjusted net income in the final year. The trend in adjusted total assets was generally upward, but the changes in profitability appear to have been the primary driver of the adjusted ROA fluctuations.