PepsiCo Inc. (NASDAQ:PEP)

The short-term operating activity ratios exhibit varied trends over the observed period. Inventory turnover generally remains within a relatively narrow range, while receivables turnover shows more pronounced fluctuations. The average inventory processing period and average receivable collection period demonstrate consistent patterns, influencing the overall operating cycle.

Inventory Turnover

Inventory turnover demonstrates a slight degree of variability, fluctuating between approximately 6.44 and 7.95. A minor decline is observed from 2022 to mid-2023, followed by a recovery and stabilization around 7.22-7.87. A more noticeable decrease occurs in the first half of 2025, falling to 6.44, before recovering to 7.37 and 7.06 in subsequent periods. This suggests potential shifts in inventory management efficiency or demand patterns.

Receivables Turnover

Receivables turnover displays greater volatility than inventory turnover. It begins at 8.58 and dips to 7.80 before recovering to 8.50 by the end of 2022. A similar pattern of decline and recovery is seen in 2023, with a low of 7.78 and a high of 8.46. The ratio increases significantly to 8.89 in late 2023, then stabilizes around 8.40-7.60 through early 2025. A subsequent increase to 8.16 and a slight decrease to 7.84 are observed, indicating potential changes in credit policies or customer payment behavior.

Average Inventory Processing Period

The average inventory processing period generally fluctuates between 46 and 52 days. A slight increase is noted from 46 days in March 2022 to 50 days in June 2022, followed by a return to 47 days. The period increases to 51 and 52 days in the first half of 2023, then decreases to 46 days by the end of 2023. A rise to 57 days in early 2025 is observed, followed by a decrease to 50 and 52 days in subsequent periods. This suggests potential variations in the efficiency of inventory management and supply chain operations.

Average Receivable Collection Period

The average receivable collection period remains relatively stable, generally ranging from 43 to 48 days. A slight increase is observed from 43 days in March 2022 to 47 days in June 2022, followed by a return to 43 days. The period increases to 46 and 47 days in the first half of 2023, then decreases to 43 days by the end of 2023. A peak of 50 days is seen in mid-2025, before decreasing to 45 and 47 days. This indicates consistent, but occasionally fluctuating, efficiency in collecting receivables.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, fluctuates between 87 and 106 days. It begins at 89 days and peaks at 98 days in mid-2023. A decrease to 89 days is observed by the end of 2023, followed by an increase to 106 days in early 2025. The cycle then decreases to 95 and 99 days in subsequent periods. The operating cycle’s fluctuations correlate with the changes in the individual component periods, suggesting a consistent relationship between inventory management, receivables collection, and the overall cash conversion cycle.

Inventory turnover exhibited a generally stable pattern over the observed period, with fluctuations occurring throughout the year. A slight downward trend was initially observed from the first quarter of 2022 through the second quarter of 2023, followed by a period of relative stability and then a modest decline towards the end of the analyzed timeframe.

Overall Trend

The inventory turnover ratio began at 7.95 in March 2022. It decreased to 7.26 in June 2022, before recovering to 7.83 in September 2022 and remaining relatively consistent at 7.77 in December 2022. A further decrease was noted in March 2023 (7.22) and June 2023 (7.01). The ratio then experienced an increase to 7.59 in September 2023 and 7.85 in December 2023. A slight decline was observed in the first half of 2024, reaching 7.12 in June 2024. The ratio showed some recovery in the latter half of 2024, reaching 7.87 in December 2024. A downward trend resumed in 2025, with the ratio falling to 6.44 in June 2025, and then stabilizing around 6.98-7.37 through December 2025. The final two periods show a slight decrease to 7.06 and then to the lowest point of the period at 6.88 in December 2026.

Seasonal Patterns

A recurring pattern appears to be a slight dip in inventory turnover during the second quarter (June) of each year, followed by a recovery in the third and fourth quarters (September and December). This suggests potential seasonal factors influencing inventory management, possibly related to production cycles or consumer demand fluctuations. However, the magnitude of these fluctuations is relatively small.

Recent Performance

The most recent quarters demonstrate a consistent decline in inventory turnover. The ratio decreased from 7.87 in December 2024 to 6.88 in December 2026. This recent trend warrants further investigation to determine the underlying causes, such as potential increases in inventory levels, slower sales, or changes in product mix.

Cost of Sales and Inventory Relationship

Cost of sales generally increased over the period, with corresponding fluctuations in inventory levels. While cost of sales increased from US$7,433 million in March 2022 to US$13,723 million in December 2025, inventory levels also increased, albeit at a slower rate. This relationship contributes to the observed fluctuations in the inventory turnover ratio. The slight decrease in inventory turnover in the most recent periods, despite continued increases in cost of sales, suggests a potential build-up of inventory.

The receivables turnover ratio exhibits a generally stable pattern over the observed period, with fluctuations occurring throughout the year. An initial decline is noted from March 2022 through June 2022, followed by relative stability through December 2022. This pattern repeats in the subsequent years, suggesting a seasonal component to the ratio.

Overall Trend

The receivables turnover ratio generally remains within a narrow band of 7.31 to 8.89. While fluctuations are present, there is no clear long-term upward or downward trend. The ratio appears to oscillate around an average of approximately 8.0.

Seasonal Patterns

A consistent pattern emerges where the ratio tends to be higher in the first and fourth quarters, and lower in the second and third quarters. For example, in 2022, the ratio decreased from 8.58 in March to 7.80 in June, then remained relatively stable before increasing again to 8.50 in December. This pattern is replicated in 2023, 2024, and 2025. The most recent observation in June 2025 shows a ratio of 7.41, continuing this seasonal trend.

Recent Performance

The ratio experienced a slight decrease from September 2024 (7.60) to June 2025 (7.41). This recent dip warrants monitoring to determine if it represents a temporary fluctuation or the beginning of a more sustained decline. The ratio in December 2024 was 8.89, the highest value in the observed period, followed by a decrease in the subsequent two quarters.

Comparison Across Years

Comparing the same quarters across different years reveals consistency in the seasonal pattern. For instance, the ratio in June consistently falls below the values observed in March and December. However, direct year-over-year comparisons within the same quarter are not significantly different, suggesting the business maintains a relatively consistent collection period.

In conclusion, the receivables turnover ratio demonstrates a stable, seasonally influenced pattern. While fluctuations occur, the ratio remains within an acceptable range, indicating consistent efficiency in collecting receivables. Continued monitoring of the recent slight decline is recommended.

The provided financial information details working capital and net revenue over a period spanning from March 2022 to December 2025. Analysis focuses on the calculated working capital turnover ratio, which is currently incomplete but can be derived from the provided figures. The working capital consistently presents as a negative value throughout the observed period, indicating a net working capital deficit.

Working Capital Trend

Working capital exhibits considerable fluctuation. It begins at -3,482 in March 2022, dips to -5,246 by December 2022, and then fluctuates between approximately -3,400 and -5,700 through 2023 and 2024. A significant decrease is observed in June 2025, reaching -8,186, before recovering somewhat to -4,815 by December 2025. This volatility suggests potential challenges in managing short-term assets and liabilities.

Net Revenue Trend

Net revenue demonstrates a generally upward trend, with seasonal variations. Revenue increases from 16,200 in March 2022 to 27,996 by December 2022. This growth continues into 2023, peaking at 29,343 in December 2023. A slight dip is seen in March 2026 to 19,443, but overall revenue remains at a high level compared to the beginning of the period. The revenue pattern suggests a strong seasonal component, with peaks typically occurring in the fourth quarter.

Working Capital Turnover (Calculated)

Given the negative working capital values, the calculated working capital turnover ratios will also be negative. While the ratios are not directly provided, they can be computed by dividing net revenue by working capital. The magnitude of the negative turnover ratio will vary depending on the specific quarterly values. A more negative ratio indicates a greater reliance on external financing to fund operations, given the working capital deficit. The trend in the calculated ratios would likely mirror the fluctuations in net revenue and working capital, with the impact of the negative working capital amplifying the changes.

The consistent negative working capital, coupled with the calculated negative working capital turnover, suggests the entity relies heavily on financing to support its day-to-day operations. While revenue is growing, the inability to maintain positive working capital warrants further investigation into the company’s liquidity management and operational efficiency.

The average inventory processing period exhibited fluctuations over the observed timeframe. Initially, the period stood at 46 days in March 2022, increasing to 50 days by June 2022, before decreasing slightly to 47 days in September 2022 and remaining stable through December 2022.

A subsequent increase was noted in the first half of 2023, reaching 51 days in March and peaking at 52 days in June. The period then decreased to 48 days in September 2023 and 46 days by the end of the year. This pattern of fluctuation continued into 2024, with a rise to 51 days in March, followed by a decrease to 46 days in December.

Inventory Processing Period Trend

From March 2024 through June 2025, the average inventory processing period generally increased. It rose from 48 days to 57 days, indicating a lengthening of the time required to convert inventory into sales. A slight decrease to 52 days was observed in September 2025, followed by a stabilization at 50 days in December 2025. The period then increased again to 52 days by March 2026.

The highest observed average inventory processing period was 57 days in June 2025, while the lowest was 46 days, occurring multiple times throughout the period, including March 2022, December 2022, and December 2024. The overall trend suggests a moderate increase in the time taken to process inventory towards the end of the observation period, although with considerable quarterly variability.

Recent Performance

The most recent periods show a slight upward trend in the average inventory processing period, moving from 50 days in December 2025 to 52 days in March 2026. This suggests a potential slowing in inventory turnover or an increase in inventory levels.

The fluctuations observed throughout the period warrant further investigation to determine the underlying causes, such as changes in supply chain dynamics, demand patterns, or inventory management strategies.

The average receivable collection period exhibited relative stability over the observed period, with fluctuations primarily occurring between 43 and 50 days. An initial observation reveals a slight increase from 43 days in March 2022 to 47 days in June 2022, holding steady through September 2022 before returning to 43 days by the end of that year.

Overall Trend

The period demonstrates a cyclical pattern. While generally remaining within a narrow range, the collection period tends to increase during the summer months (June/September) and decrease towards the end of the year (December/March). This pattern is not consistently observed, however, and variations occur.

A notable increase is observed in the collection period during the first half of 2023, rising from 43 days in March to 46 days in June and 47 days in September. This is followed by a return to 43 days in December. The period then experiences a more pronounced increase in 2024, peaking at 49 days in March and remaining elevated at 48 days in September.

Recent Fluctuations

The collection period decreased to 41 days in December 2024, representing the lowest value in the observed timeframe. This decrease was short-lived, as the period increased to 43 days in March 2025, then continued to climb to 50 days in September 2025. A subsequent decrease to 45 days is seen in December 2025, followed by a slight increase to 47 days in March 2026.

The most recent values suggest a potential stabilization around the 47-day mark, although continued monitoring is necessary to confirm this trend. The fluctuations observed throughout the period do not indicate a significant or consistently worsening trend in the company’s ability to collect receivables, but warrant continued attention to identify potential underlying causes for the periodic increases.

Long-Term Stability

Despite the fluctuations, the average receivable collection period has largely remained within a manageable range, indicating generally consistent credit and collection practices. The variations observed may be attributable to seasonal sales patterns, changes in customer payment terms, or other external factors.

The operating cycle exhibits fluctuations over the observed period, with discernible trends in both its components and the aggregate measure. The average inventory processing period and average receivable collection period contribute to these observed changes.

Average Inventory Processing Period

The average inventory processing period generally remained within a relatively narrow range between 46 and 52 days throughout the analyzed timeframe. An initial increase from 46 days in March 2022 to 50 days in June 2022 is observed, followed by a slight decrease. The period experienced a peak of 57 days in June 2025, representing the highest value recorded. Subsequent quarters show a return towards the 50-52 day range. Overall, the period demonstrates a slight upward drift, particularly towards the end of the observation window.

Average Receivable Collection Period

The average receivable collection period also demonstrates variability. It initially increased from 43 days in March 2022 to 47 days in June 2022, remaining around that level for several quarters. A notable increase to 50 days is seen in September 2025, followed by a decrease to 45 days in December 2025. The period generally fluctuates between 43 and 49 days, with no strong directional trend apparent. A slight increase is observed in the most recent quarters.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, generally ranged between 87 and 106 days. A peak of 106 days was recorded in June 2025, coinciding with increases in both component periods. The lowest value, 87 days, occurred in December 2024. The operating cycle generally trended upwards from 89 days in March 2022, with a more pronounced increase in the latter half of the period. The most recent quarters show a cycle around 99-106 days, suggesting a potential lengthening of the time required to convert investments in inventory and receivables into cash. The cycle appears to be influenced by the fluctuations in both inventory processing and receivable collection periods.

The observed increases in both the inventory processing and receivable collection periods, particularly towards the end of the analyzed period, warrant further investigation. Potential factors contributing to these increases could include changes in inventory management practices, credit policies, or customer payment behavior. Monitoring these trends is crucial for maintaining efficient working capital management.