PepsiCo Inc. (NASDAQ:PEP)

Over the observed period, spanning from March 2022 to December 2025, the solvency ratios exhibited generally increasing trends, suggesting a growing reliance on debt financing. While fluctuations occurred within the period, the overall direction indicates a strengthening of financial leverage. The analysis below details the trends for each ratio individually.

Debt to Equity Ratio

The debt to equity ratio demonstrated an increasing trend throughout the period. Starting at 2.20 in March 2022, it generally rose, reaching 2.79 in June 2025 before decreasing slightly to 2.41 in December 2025. This indicates that the proportion of debt financing relative to equity financing has increased over time, signifying higher financial risk. The most significant increase occurred between March 2024 and June 2025.

Debt to Capital Ratio

The debt to capital ratio showed a consistent, albeit gradual, increase. Beginning at 0.69 in March 2022, the ratio climbed to 0.74 in June 2025, then decreased to 0.71 in December 2025. This suggests a growing proportion of debt in the company’s capital structure. The increases were relatively small each quarter, indicating a steady shift rather than abrupt changes.

Debt to Assets Ratio

The debt to assets ratio followed a similar pattern to the other ratios, increasing from 0.43 in March 2022 to 0.49 in June 2025, before decreasing to 0.46 in December 2025. This indicates that a larger portion of the company’s assets are financed by debt. The ratio remained relatively stable between September 2023 and March 2025, before the increase in June 2025.

Financial Leverage Ratio

The financial leverage ratio exhibited an overall upward trend, starting at 5.11 in March 2022 and peaking at 5.72 in June 2025, before decreasing to 5.26 in December 2025. This indicates an increasing use of debt to amplify returns to equity holders, and consequently, increased financial risk. The ratio experienced fluctuations, but the general direction points towards greater leverage. The most substantial increase occurred between December 2022 and March 2023.

In summary, the observed trends across all four solvency ratios suggest a deliberate or circumstantial increase in the company’s reliance on debt financing. While not necessarily indicative of immediate financial distress, the increasing leverage warrants continued monitoring to assess potential risks and ensure sustainable financial health.

The debt to equity ratio exhibits a generally increasing trend over the observed period, punctuated by some quarterly fluctuations. Initially, the ratio decreased from 2.20 in March 2022 to 2.07 in September 2022, before rising again to 2.28 by December 2022. This pattern of initial decline followed by increase continues into 2023, with the ratio peaking at 2.47 in June 2023 and remaining elevated through September 2023 at 2.38.

Overall Trend

From March 2022 through December 2025, the debt to equity ratio demonstrates a clear upward trajectory. The ratio begins at 2.20 and concludes at 2.41. While there are quarterly variations, the overall movement indicates a growing reliance on debt financing relative to equity.

The most significant increase in the ratio occurs between March 2024 and June 2025, rising from 2.64 to 2.79. This suggests a substantial increase in debt or a decrease in equity during this period. A subsequent decrease is observed in September 2025 (2.62) and December 2025 (2.41), indicating a partial reversal of this trend, though the ratio remains higher than at the beginning of the observation period.

Quarterly Fluctuations

The ratio experiences quarterly volatility. For example, a decrease is noted between December 2022 (2.28) and March 2023 (2.45). Similarly, a decrease is observed between September 2023 (2.38) and December 2023 (2.38). These fluctuations suggest dynamic changes in the company’s capital structure, potentially driven by financing activities, profitability, or asset revaluation.

The increase in the debt to equity ratio throughout the period suggests that the company is increasingly financing its assets with debt rather than equity. While not inherently negative, a consistently rising ratio could indicate increased financial risk, as higher debt levels necessitate larger interest payments and potentially limit financial flexibility. The recent decrease in the ratio during the final two quarters of the observed period offers a potential indication of improved financial leverage, but continued monitoring is warranted.

Recent Developments

The ratio’s decline from 2.79 in June 2025 to 2.41 in December 2025 is a notable development. This could be attributed to increased equity, debt reduction, or a combination of both. Further investigation into the underlying drivers of this change is recommended to assess its sustainability and implications for the company’s financial health.

The debt to capital ratio exhibits a generally increasing trend over the observed period, spanning from March 2022 to December 2025. While fluctuations occur, the ratio demonstrates a consistent move towards greater reliance on debt financing relative to total capital.

Initial Period (Mar 2022 - Dec 2022)

The debt to capital ratio began at 0.69 in March 2022, decreased slightly to 0.67 in September 2022, and then recovered to 0.69 by the end of December 2022. This initial period suggests a relatively stable capital structure with minor adjustments in the debt-to-capital mix.

Ascending Trend (Mar 2023 - Jun 2024)

From March 2023 through June 2024, the ratio consistently increased, moving from 0.71 to 0.70. This indicates a gradual increase in the proportion of debt used to finance the company’s assets and operations. The increase, while incremental, is noticeable and suggests a shift in the company’s financing strategy.

Peak and Subsequent Adjustment (Sep 2024 - Dec 2025)

The ratio peaked at 0.73 in March 2025, representing the highest level observed throughout the period. Following this peak, a slight decrease was observed, with the ratio settling at 0.71 by December 2025. This suggests a potential recalibration of the capital structure after reaching a higher level of debt financing.

Overall Movement

The overall trend reveals an increase in the debt to capital ratio from 0.69 in March 2022 to 0.71 in December 2025. This represents a 2.9% increase over the entire period. The company appears to be increasingly leveraging debt as a component of its capital structure, although the final data points suggest a potential stabilization or slight reduction in this reliance.

The observed fluctuations, while present, do not disrupt the overarching trend of increasing debt relative to capital. Continued monitoring of this ratio is recommended to assess the long-term implications of this financing approach.

The debt-to-assets ratio for the analyzed period demonstrates a generally increasing trend, indicating a growing reliance on debt financing relative to the company’s asset base. While fluctuations occur, the overall pattern suggests a shift in the capital structure.

Initial Period (Mar 19, 2022 – Dec 31, 2022)

The debt-to-assets ratio remained relatively stable, fluctuating between 0.42 and 0.43. This suggests a consistent level of financial leverage during this timeframe. Total debt decreased slightly from US$40,049 million to US$39,071 million, while total assets experienced a minor decrease from US$92,962 million to US$92,187 million.

Ascending Trend (Mar 25, 2023 – Sep 9, 2023)

An upward trend commenced in March 2023, with the ratio increasing from 0.45 to 0.45. This coincided with increases in both total debt, rising from US$41,767 million to US$44,774 million, and total assets, growing from US$93,042 million to US$99,953 million. The ratio remained at 0.45 for two consecutive quarters.

Peak and Stabilization (Dec 30, 2023 – Sep 7, 2024)

The ratio peaked at 0.46 in December 2023 before stabilizing around 0.45 for the subsequent three quarters. Total debt remained relatively consistent, fluctuating between US$44,105 million and US$45,014 million. Total assets showed a similar pattern, ranging from US$99,533 million to US$100,513 million.

Recent Increase (Mar 22, 2025 – Dec 27, 2025)

The most recent period exhibits a further increase in the debt-to-assets ratio, reaching 0.48 in March 2025 and 0.49 in June 2025, before decreasing to 0.48 in September 2025 and 0.46 in December 2025. This corresponds with a rise in total debt from US$48,518 million to US$51,384 million, followed by a decrease to US$49,182 million. Total assets also increased, moving from US$101,737 million to US$107,399 million.

In summary, the debt-to-assets ratio has generally trended upwards over the analyzed period. While asset growth has accompanied the increase in debt, the rising ratio suggests a greater proportion of assets are financed by debt, potentially increasing financial risk. The fluctuations observed indicate dynamic shifts in financing strategies and asset management.

The financial leverage ratio for the analyzed period demonstrates a generally stable, yet fluctuating, pattern. Initially, the ratio exhibited a slight decreasing trend from 5.11 in March 2022 to 4.98 in September 2022. Subsequently, it increased to 5.38 by December 2022, before fluctuating between approximately 5.12 and 5.46 throughout 2023. A notable increase to 5.51 was observed in December 2023, followed by a slight decrease and then a further increase to 5.72 in June 2024. The ratio then decreased to 5.26 by December 2025.

Overall Trend

The financial leverage ratio generally remained within a narrow band between 4.98 and 5.72 over the analyzed period. While fluctuations occurred, there was no sustained, significant upward or downward trend. The ratio appears to have peaked in June 2024, before declining slightly in subsequent periods.

Short-Term Fluctuations

A minor decrease in financial leverage was observed during the first three quarters of 2022. A subsequent increase in the fourth quarter of 2022 suggests a potential shift in capital structure or debt levels. The ratio remained relatively stable throughout most of 2023, with minor variations. The increase in the ratio during the latter half of 2023 and the first half of 2024 warrants further investigation to determine the underlying causes.

Recent Developments

The most recent periods (September 2024 – December 2025) show a decrease in the financial leverage ratio from 5.51 to 5.26. This suggests a potential reduction in debt or an increase in equity, or a combination of both. This recent decline could indicate a deliberate strategy to reduce financial risk.

The observed fluctuations in financial leverage should be considered in conjunction with other solvency and profitability metrics to gain a comprehensive understanding of the company’s financial health. Further analysis should investigate the specific factors driving these changes, such as debt issuance, repayment, equity offerings, or changes in asset levels.