PepsiCo Inc. (NASDAQ:PEP)

Current Ratio

The current ratio displays a generally declining trend over the observed periods, starting at 1.1 in March 2020 and decreasing to 0.78 by June 2025. There are short-term fluctuations, such as a slight increase around September 2023 to March 2024, but the overall movement suggests a gradual reduction in the company's ability to cover short-term liabilities with current assets.

Quick Ratio

The quick ratio follows a similar downward trajectory, with an initial value of 0.89 in March 2020 declining to 0.56 by June 2025. This indicates a reduction in the company's liquid assets relative to current liabilities, excluding inventories. Minor recoveries occur sporadically; however, the longer-term trend reflects tightening liquidity conditions.

Cash Ratio

The cash ratio shows the most pronounced decrease, starting at 0.51 in March 2020 and declining to 0.22 by June 2025. This considerable drop highlights a reduction in the company's most liquid assets (cash and cash equivalents) relative to current liabilities. Despite some temporary increases, notably around December 2023 and March 2024, the overall pattern signifies diminished immediate liquidity.

The analysis of the quarterly financial data reveals notable trends in current assets, current liabilities, and the current ratio across the observed periods.

Current Assets

Current assets showed fluctuations over the periods, with a general pattern of moderate volatility. Starting from 24,268 million USD in March 2020, the value declined to a low of 21,196 million USD by March 2021. Following that, an upward trend is observed, peaking significantly at 28,649 million USD in September 2023. Thereafter, values stabilized somewhat with some variability, ending at 28,210 million USD in June 2025. This suggests periods of asset accumulation interspersed with occasional drawdowns.

Current Liabilities

Current liabilities exhibited a generally increasing trend throughout the analyzed timeframe. Beginning at 22,078 million USD in March 2020, the liabilities rose steadily, reaching a peak of 36,396 million USD by June 2025. The trajectory indicates a continuous increase in short-term obligations, with some quarters showing sharper increases, such as between March and June 2025.

Current Ratio

The current ratio, a liquidity measure, demonstrates a declining and generally suboptimal trend. Initially, at 1.10 in March 2020, the ratio decreased below the benchmark of 1.0 in subsequent quarters and mostly remained under 1.0 throughout the periods, reaching a low of 0.78 by June 2025. This decline reflects increasing current liabilities relative to current assets, indicating potential liquidity pressure and reduced short-term financial flexibility over time.

In summary, the data exhibits an increasing imbalance between current assets and liabilities, as current liabilities grow at a faster pace than current assets. The sustained current ratio below 1.0 highlights potential challenges in meeting short-term obligations without restructuring or additional financing. These trends warrant attention to liquidity management and working capital strategies to ensure financial stability in future periods.

Quick Assets

The total quick assets displayed fluctuations over the observed periods. Beginning at 19,724 million USD in March 2020, the value saw a decline until March 2021, reaching approximately 15,510 million USD. Subsequently, a moderate recovery is observed with peaks and troughs throughout 2022 and 2023. Notably, there was a significant increase during September 2023, reaching 22,065 million USD before declining again towards June 2025, where the value is approximately 20,363 million USD. This indicates variability in liquid asset holdings, potentially reflective of seasonal business cycles or liquidity management strategies.

Current Liabilities

Current liabilities have generally trended upwards over the examined timeframe. From 22,078 million USD in March 2020, liabilities increased steadily with some volatility, culminating in a peak of 36,396 million USD in June 2025. This rising trend in current liabilities suggests an increasing short-term obligation burden, which may be attributed to operational scale expansion or changes in credit terms with suppliers and creditors.

Quick Ratio

The quick ratio exhibited a downward shift initially, dropping from 0.89 in March 2020 to a low of 0.56 by December 2021. This reflects a diminishing ability to cover short-term liabilities with quick assets during that period. Although some recovery attempts are observed with the ratio climbing to 0.68 in September 2023, the quick ratio generally remained below the initial levels and hovered around 0.6 thereafter, ending at 0.56 in December 2025. These values suggest sustained pressure on liquidity, indicating the company may face challenges in meeting immediate liabilities without relying on inventory sales or other sources of liquidity.

Summary Insights

Overall, the analyzed data reflects a dynamic liquidity situation. The decline and partial recovery in quick assets, combined with a generally increasing current liability base, have exerted downward pressure on the quick ratio, a key liquidity indicator. The quick ratio remaining below 1 throughout the period signals that quick assets are insufficient to cover current liabilities at any point, which warrants cautious monitoring. The observed trends could be influenced by operational, market, or strategic factors affecting asset and liability management. The management may need to address liquidity risk to ensure robust short-term financial stability.

The financial data reveals several notable trends relating to the company's liquidity position over the observed periods.

Total Cash Assets (US$ in millions)

The total cash assets show a fluctuating pattern with a generally downward trend in the early periods, reaching a low in mid-2021. Thereafter, there is intermittent recovery with significant increases noted in the quarters ending September 2023 and December 2023, where cash assets peaked above 10 billion US dollars. This peak suggests temporary liquidity strengthening. However, following these peaks, cash assets tend to decline again, settling at moderately lower levels by mid-2025, indicating variability but no sustained upward trajectory.

Current Liabilities (US$ in millions)

Current liabilities demonstrate a consistent upward trend over the entire period. Starting from approximately 22 billion US dollars in early 2020, these liabilities increased steadily with minor fluctuations, reaching above 36 billion by mid-2025. The persistent rise in current liabilities indicates growing short-term obligations which could pressure liquidity if not matched by proportional cash or liquid assets.

Cash Ratio (ratio)

The cash ratio, which measures the company's ability to cover current liabilities with cash and cash equivalents, exhibits a declining trend initially, dropping from 0.51 in early 2020 to lows around 0.20 in late 2022 and early 2023. This decline suggests that cash available relative to current liabilities diminished, potentially increasing liquidity risk. There is a modest rebound around late 2023 with the cash ratio rising to approximately 0.31 and 0.32, coinciding with peaks in cash assets, but this improvement is short-lived as the ratio decreases again to about 0.22 by mid-2025. Overall, the cash ratio remains below 0.40 in recent periods, indicating relatively low immediate liquidity buffers against current liabilities.

In summary, the data indicates growing current liabilities alongside volatile cash holdings that have experienced temporary increases but no consistent improvement. The cash ratio trend highlights a weakening in the company’s immediate liquidity position over time, with ratios often below the generally preferred threshold of 0.50. This suggests that while the company may maintain operational liquidity through other assets or financing, its cash reserves relative to short-term debt are relatively constrained in the long term.