PepsiCo Inc. (NASDAQ:PEP)

The analysis of liquidity ratios over the examined periods reveals several notable trends. The current ratio, which measures the company's ability to cover short-term obligations with current assets, demonstrates a general downward trend from 1.1 in early 2020 to fluctuating values mostly below 1.0 in subsequent quarters. This indicates a slight decline in short-term financial strength, with occasional minor recoveries, such as the rise to 0.91 in September 2025.

The quick ratio, a more stringent measure of liquidity excluding inventories, also mirrors this downward pattern. Starting at 0.89 in March 2020, the quick ratio consistently remains below 0.7 for most of the periods, reaching lows near 0.56–0.58. This lower ratio suggests a reduction in more liquid assets available to meet short-term liabilities, signaling potential pressures on immediate liquidity.

The cash ratio, representing the most conservative liquidity measure focusing on cash and cash equivalents, exhibits the lowest values among the three ratios. Beginning at 0.51 in March 2020, it declines sharply to as low as around 0.2 to 0.3 over the majority of the timelines. This pattern reflects relatively limited cash reserves compared to current liabilities, implying cautious cash management or possible constraints on cash availability during these periods.

Overall, the liquidity profile indicates a gradual decrease in short-term asset coverage capability relative to liabilities. Despite intermittent improvements, the consistent position of these ratios below 1.0 (particularly the current and quick ratios) points to a conservative or tightened liquidity stance. This could suggest a strategic choice or a response to operating conditions affecting the balance between liquid assets and short-term obligations.

Current Ratio

Hovering generally below 1.0 after early 2020, implying marginal short-term liquidity.

Quick Ratio

Consistent decline below 0.7, indicating lower immediate asset availability excluding inventory.

Cash Ratio

Lowest liquidity measure, largely between 0.2 and 0.3, reflecting limited cash reserves.

The analysis focuses on the liquidity position as reflected by current assets, current liabilities, and the current ratio over several quarterly periods.

Current Assets

Current assets exhibit fluctuations over the observed quarters, starting from approximately 24,268 million US dollars and reaching peaks above 28,000 million in certain later periods. There is an observable increase towards the end of the series, indicating an expansion in liquid and short-term assets.

Current Liabilities

Current liabilities have generally trended upward from around 22,078 million US dollars initially to levels as high as approximately 36,396 million. This upward movement suggests a growth in short-term obligations, which may impact the company’s liquidity depending on asset coverage.

Current Ratio

The current ratio, which measures the ability to cover short-term liabilities with short-term assets, shows a declining trend overall. Starting near 1.1, it drops below 1 in many periods with few rebounds, and even reaches lows around 0.78. Such levels indicate that current liabilities often exceed current assets, potentially reflecting tighter liquidity conditions or greater reliance on short-term financing.

In summary, despite increases in current assets over time, current liabilities have grown at a faster or similar pace, leading to a current ratio generally below 1. This suggests that the company may face challenges in meeting short-term obligations solely from its current assets, warranting careful management of working capital and liquidity risk.

Quick Assets Trend

The total quick assets show considerable fluctuations over the observed periods. Initially, a decrease is noted from 19,724 million USD in March 2020 to 15,510 million USD by March 2021. This was followed by some recovery, peaking at 22,065 million USD in September 2023. However, subsequent data reveal variability with a slight downward tendency towards approximately 19,382 million USD by September 2025. Overall, quick assets display a cyclical pattern with mid-term recovery after an initial decline.

Current Liabilities Trend

Current liabilities generally increased across the timeline. Starting from about 22,078 million USD in March 2020, liabilities rose steadily, with some volatility, reaching a peak at 36,396 million USD in June 2025. Despite minor reductions in certain quarters, the prevailing trajectory suggests an upward pressure on short-term obligations throughout the observed period.

Quick Ratio Analysis

The quick ratio, representing liquidity, consistently remained below 1, indicating potential liquidity constraints. The ratio declined from 0.89 in March 2020 to a low point around 0.56 in December 2021 and June 2025. There were intermittent recoveries, with ratios fluctuating mostly between 0.56 and 0.68, without sustained improvement above 0.7. This pattern reflects continuing challenges in covering current liabilities with liquid assets, highlighting pressure on immediate financial flexibility.

Overall Financial Insights

The combination of increasing current liabilities and fluctuating yet generally stagnant quick assets resulted in a persistently low quick ratio. This suggests that liquidity management remains a concern, as the company's ability to meet short-term obligations using its most liquid assets did not improve markedly over the periods reviewed. The data imply a need for monitoring and potentially strengthening liquidity to avoid financial stress.

The financial data reveals several notable trends in liquidity and working capital components over the observed periods. The total cash assets exhibit fluctuations with a general pattern of decline in early periods followed by partial recoveries. Initially, cash assets decreased from 11,247 million USD in March 2020 to a low point of approximately 5,204 million USD by March 2023, after which a significant increase occurred, reaching over 10,000 million USD by December 2023. This was followed by variability with lower levels observed in mid and late 2024 before some recovery into 2025.

Current liabilities show an overall increasing trend throughout the periods. Starting near 22,078 million USD in March 2020, liabilities steadily rose to peak approximately 36,396 million USD by June 2025. This growing liability base signals increased short-term obligations over the five-year span.

The cash ratio, which measures the ability to cover current liabilities with cash assets alone, closely mirrors the interplay between cash assets and current liabilities. It declined sharply from a strong 0.51 in March 2020 to a trough around 0.20 in early 2023, indicating reduced liquidity relative to short-term debts. Although there were intermittent improvements, the ratio generally remained low, fluctuating between 0.20 and 0.32, before slightly rising toward 0.27 by mid-2025. The ratio never returned to the early 2020 levels, suggesting persistent pressure on immediate liquidity.

Total Cash Assets

Demonstrated volatility with a significant decline from early 2020 through early 2023, followed by intermittent recoveries and declines into 2025.

Current Liabilities

Showed an upward trajectory, increasing from just over 22 billion USD to beyond 36 billion USD by mid-2025, indicating rising short-term debt obligations.

Cash Ratio

Fell notably from early 2020 highs, reflecting diminishing cash buffer relative to liabilities. Despite some improvements, it generally stabilized at a lower range, signaling sustained liquidity constraints.

In summary, the company’s liquidity position appeared to weaken over the period analyzed due to declining cash assets and rising current liabilities, as evidenced by a reduced cash ratio. Although some recoveries in cash assets occurred, they did not fully restore the earlier liquidity strength. The rising current liabilities emphasize increasing short-term financial obligations that may require strategic management to maintain financial flexibility.