PepsiCo Inc. (NASDAQ:PEP)

Inventory Turnover

The inventory turnover ratio shows fluctuations over the five-year period, increasing from 7.62 in 2020 to a peak of 8.53 in 2021, then declining to 7.77 in 2022 before stabilizing around 7.85-7.87 in the subsequent years. This indicates an initial improvement in inventory efficiency followed by a slight decline and leveling off.

Receivables Turnover

The receivables turnover ratio generally trends upward from 8.37 in 2020 to 8.89 in 2024, with a minor dip in 2022 and 2023. This suggests improved effectiveness in collecting receivables over time, especially notable at the start and end of the period analyzed.

Payables Turnover

The payables turnover ratio increases from 3.59 in 2020 to 3.77 in 2021 and remains relatively stable with slight fluctuations around 3.6 to 3.8 through to 2024. This reflects a consistent pace in settling payables, with no significant changes evident.

Average Inventory Processing Period

The average inventory processing period, measured in days, decreased from 48 in 2020 to 43 in 2021, signaling faster inventory processing. However, it rose again to 47 days in 2022 and then settled at 46 days for 2023 and 2024, indicating a return to longer inventory holding times relative to the 2021 low.

Average Receivable Collection Period

There is a general decline in the average receivable collection period from 44 days in 2020 to 41 days in 2024, with minor fluctuations. This points to a gradual improvement in the speed of collecting receivables over the period.

Operating Cycle

The operating cycle, which combines inventory and receivables periods, decreased from 92 days in 2020 to a low of 83 days in 2021. It then rose to 90 days in 2022, followed by a slight decline to 87 days in 2024. This suggests operational efficiency improved in early years but showed some regression afterward, yet remained better than in 2020.

Average Payables Payment Period

The average payables payment period shortened from 102 days in 2020 to 97 days in 2021 and 2022. It then increased slightly to 101 days in 2023 before declining again to 96 days in 2024. This pattern indicates some variability in the company's payment timing to suppliers, with a general trend toward faster payment at the end of the period.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout the period, indicating that the company delays cash outflows beyond the time it takes to convert inventory and receivables into cash. However, the cycle fluctuates between -14 days in 2021 and -7 days in 2022, with intermediate values around -10 to -12 days, reflecting variations in working capital management but consistent overall effectiveness in generating cash flows.

Cost of Sales

The cost of sales has demonstrated a consistent upward trajectory from 2020 to 2023, increasing from approximately 31,797 million US dollars to 41,881 million US dollars. This trend reflects rising expenses related to production or procurement of goods sold. Notably, the value for 2024 shows a slight decline to 41,744 million US dollars, indicating a potential stabilization or minor reduction in costs after several years of growth.

Inventories

Inventories have progressively increased over the five-year span, rising from 4,172 million US dollars in 2020 to 5,306 million US dollars in 2024. The growth is steady with somewhat larger increments noted between 2021 and 2022, and smaller increases thereafter. This development suggests gradual accumulation of stock or materials held by the company, possibly to support anticipated sales growth or due to changing supply chain strategies.

Inventory Turnover Ratio

The inventory turnover ratio initially increased significantly from 7.62 in 2020 to 8.53 in 2021, indicating an enhanced efficiency in managing inventory and converting it into sales. However, the ratio then declined to 7.77 in 2022, followed by slight increases to 7.85 and 7.87 in the subsequent years. This pattern reveals some fluctuations in inventory management efficiency, stabilizing at a level slightly above the ratio at the start of the period, which may reflect adjustments in operational practices or market conditions.

The financial data reveals several noteworthy trends across the analyzed periods. Net revenue shows a consistent upward trajectory from 2020 to 2024. Starting at approximately $70.4 billion in 2020, there is a steady increase each year, reaching about $91.9 billion in 2024. This reflects robust growth in the company’s ability to generate sales revenue over the five-year period, although the growth rate appears to moderate slightly towards the latter years.

Accounts and notes receivable, net, also demonstrate an increasing trend from 2020 through 2023, rising from around $8.4 billion to approximately $10.8 billion. However, it slightly declines in 2024 to around $10.3 billion. This pattern suggests that the company expanded credit extended to customers over the first four years before a small reduction, potentially reflecting tighter credit policies or improved collections in the most recent year.

The receivables turnover ratio exhibits some variability but generally remains stable within the range of approximately 8.37 to 9.16. It increased significantly from 8.37 in 2020 to a high of 9.16 in 2021, indicating improved efficiency in collecting receivables during that period. Subsequently, the ratio declined slightly in 2022 and 2023 but showed an increase again in 2024 to 8.89. This suggests fluctuations in how quickly the company collects payments but overall maintains a relatively consistent efficiency level in receivables management.

Net Revenue

Consistently increases from $70.4 billion in 2020 to $91.9 billion in 2024, indicating steady growth in revenue generation.

Accounts and Notes Receivable, Net

Rises from $8.4 billion in 2020 to $10.8 billion in 2023, followed by a slight decrease to $10.3 billion in 2024, showing growth in credit extended with a recent contraction.

Receivables Turnover Ratio

Fluctuates between 8.37 and 9.16 over the period, with a peak in 2021, reflecting variable but generally stable efficiency in collecting receivables.

Cost of Sales

The cost of sales has exhibited a continuous upward trend over the reviewed periods. Starting at $31,797 million in 2020, it increased significantly to $37,075 million in 2021, followed by further growth to $40,576 million in 2022. While the growth rate slowed slightly, the cost continued to rise, reaching $41,881 million in 2023 and maintaining a comparable level at $41,744 million in 2024, suggesting stabilization in recent periods.

Accounts Payable

Accounts payable also show an increasing pattern from 2020 through 2023, moving from $8,853 million to a peak of $11,635 million. However, in 2024, there is a noticeable decrease to $10,997 million. This reduction might reflect changes in payment policies, supplier negotiations, or improvements in cash flow management.

Payables Turnover Ratio

The payables turnover ratio generally remains stable with minor fluctuations. It increased from 3.59 in 2020 to 3.77 in 2021 and remained nearly constant at 3.78 in 2022. There was a slight decline to 3.6 in 2023 but rebounded to 3.8 in 2024. This indicates a relatively consistent rate at which the company settles its payables, with some variability potentially linked to working capital management practices or supplier payment terms.

The financial data reveals several notable trends over the period from December 2020 through December 2024.

Net Revenue

Net revenue has shown a consistent upward trajectory, increasing each year from $70,372 million in 2020 to $91,854 million in 2024. This reflects a steady growth trend with a total increase of approximately 30.5% over the five-year span. The annual increments suggest effective revenue growth strategies and expanding business operations or market presence.

Working Capital

Working capital figures display a negative and worsening pattern throughout the same period. Starting at -$371 million in 2020, the working capital deficit deepened substantially to -$5,710 million by 2024. Despite occasional fluctuations, the overall trend indicates increasing current liabilities relative to current assets. This suggests possible pressure on short-term liquidity or increased reliance on current liabilities to finance operations.

Working Capital Turnover

The absence of values for working capital turnover ratio prevents a direct assessment of how efficiently working capital is being used to generate net revenue. However, given the negative working capital and growing net revenue, it could imply operational efficiency but warrants detailed analysis to clarify the risk associated with liquidity management.

Overall, the data indicates solid revenue growth, though it is accompanied by a significant and increasing working capital deficit. This juxtaposition suggests a need to monitor liquidity management and possibly optimize the balance sheet to support sustained operational performance.

Inventory Turnover

Over the observed five-year period, the inventory turnover ratio demonstrates variability but generally maintains a consistent level between 7.6 and 8.5. The ratio peaks at 8.53 in the year ending December 25, 2021, indicating an increased efficiency in managing inventory relative to sales during that year. Following this peak, the ratio declines to 7.77 in 2022 and slightly improves in the subsequent years to 7.85 and 7.87, suggesting a return to levels closer to those observed at the start of the period.

Average Inventory Processing Period

The average inventory processing period, expressed in days, inversely correlates with the inventory turnover ratio trends across the same time frame. Starting at 48 days in 2020, it improvements are visible in 2021 when it drops to 43 days, reflecting faster inventory turnover consistent with the peak turnover ratio of that year. Subsequently, the processing period lengthens again to 47 days in 2022 and stabilizes at 46 days for both 2023 and 2024, aligning with the moderate decline in inventory turnover after 2021. This pattern indicates a slight extension in the time required to process inventory following a year of heightened efficiency.

Overall Insight

The data suggest a period of improved inventory management efficiency in 2021, followed by a slight relaxation or normalization in the following years. Despite some fluctuations, the company appears to maintain a relatively stable inventory turnover and processing period, implying consistent operational performance in inventory management throughout the observed timeline.

Receivables Turnover

The receivables turnover ratio showed a general upward trend from 8.37 in 2020 to 9.16 in 2021, indicating improved efficiency in collecting receivables during that period. However, this ratio slightly decreased to 8.5 in 2022 and remained relatively stable in 2023 at 8.46 before increasing again to 8.89 in 2024. This pattern suggests some fluctuations in the company's ability to convert receivables into cash but an overall strengthening of collection efficiency by the end of the analyzed period.

Average Receivable Collection Period

The average receivable collection period decreased from 44 days in 2020 to 40 days in 2021, reflecting a quicker conversion of receivables into cash. Subsequently, the period increased slightly to 43 days in both 2022 and 2023, indicating a modest slowing down in collections. By 2024, the collection period improved again to 41 days. Overall, the company has maintained a relatively consistent collection cycle with minor variations, ending with a shorter collection period compared to the start of the timeframe.

Summary of Trends

The financial data indicates that the company has generally maintained efficient management of its receivables. Despite some fluctuations in the receivables turnover ratio and average collection period, the metrics suggest that the company ended the period with improved or stable collection efficiency compared to the beginning. The swings in turnover ratio and collection days within the period warrant attention but do not signify major deterioration or risk in receivables management.

The analysis of the annual financial data reveals noticeable trends related to the average inventory processing period, average receivable collection period, and the overall operating cycle over the five-year span.

Average Inventory Processing Period

This metric showed a decrease from 48 days in 2020 to 43 days in 2021, indicating improved efficiency in inventory management. However, it increased to 47 days in 2022 before slightly declining and stabilizing at 46 days in 2023 and 2024. Overall, the inventory processing period fluctuated but ended slightly below the initial 2020 level.

Average Receivable Collection Period

This period displayed a consistent downward trend from 44 days in 2020 to 40 days in 2021, then a minor rebound to 43 days in 2022 and 2023, followed by a decrease to 41 days in 2024. This suggests gradual improvements in receivables collection efficiency, albeit with some variability in the interim years.

Operating Cycle

The operating cycle, the sum of inventory processing and receivable collection periods, decreased from 92 days in 2020 to 83 days in 2021, reflecting a significant improvement in working capital management. It then increased to 90 days in 2022, followed by a slight decline to 89 days in 2023 and 87 days in 2024. Despite fluctuations, the operating cycle remains lower than the initial year, indicating an overall enhancement in operational efficiency over the period analyzed.

Payables Turnover

The payables turnover ratio displays a generally stable trend with slight fluctuations over the five-year period. It increased from 3.59 in 2020 to 3.77 in 2021 and then remained nearly constant at 3.78 in 2022. A minor dip to 3.6 occurred in 2023, followed by a rebound to 3.8 in 2024. Overall, these values indicate a consistent ability to manage and settle payables, with turnover rates generally maintaining around the 3.6 to 3.8 range.

Average Payables Payment Period

The average payables payment period exhibits a fluctuating yet relatively stable pattern within a tight range. Starting at 102 days in 2020, the period shortened to 97 days in both 2021 and 2022, suggesting a faster payment cycle during these years. It increased slightly to 101 days in 2023 before decreasing again to 96 days in 2024. This fluctuation indicates some variation in payment timing but overall reflects a payment period consistently near the 100-day mark, with a slight trend toward quicker payments in the most recent year.

Relation Between Metrics

The inverse relationship between payables turnover and average payment period is generally upheld, as periods of higher turnover correspond to shorter payment periods and vice versa. This aligns with expected financial behavior and suggests efficient management of liabilities over the years analyzed.

Average Inventory Processing Period

The average inventory processing period demonstrates moderate fluctuation over the observed years. Starting at 48 days in 2020, it decreased notably to 43 days in 2021, then increased to 47 days in 2022. It slightly improved again to 46 days in both 2023 and 2024, indicating a stabilization after some variability.

Average Receivable Collection Period

This metric shows a general declining trend with some fluctuations. It started at 44 days in 2020, reduced to 40 days in 2021, rose slightly to 43 days in 2022 and 2023, before falling again to 41 days in 2024. This suggests an overall improvement in the efficiency of receivables collection despite minor increases in the middle years.

Average Payables Payment Period

The average payables payment period exhibits limited variability. It reduced from 102 days in 2020 to 97 days in 2021 and remained steady at 97 days in 2022. There was a slight increase to 101 days in 2023, followed by another decrease to 96 days in 2024. This pattern indicates a consistent management of payment obligations with minor year-to-year adjustments.

Cash Conversion Cycle

The cash conversion cycle remains consistently negative across all years, ranging from -14 days to -7 days. It improved from -10 days in 2020 to a more favorable -14 days in 2021, then worsened to -7 days in 2022. Thereafter, it improved once more to -12 days in 2023 and slightly less to -9 days in 2024. A negative cash conversion cycle indicates the company collects cash from operations faster than it pays its suppliers, reflecting efficient working capital management overall despite some fluctuations.