PepsiCo Inc. (NASDAQ:PEP)

The analysis of the quarterly financial ratios and periods over the observed timeframe reveals several noteworthy trends and patterns.

Inventory Turnover

The inventory turnover ratio displayed fluctuations within a range of approximately 6.4 to 8.5. Initially, it decreased from 7.1 to 6.82, then rose sharply to 8.53 before declining again. This oscillation suggests periodic changes in inventory management efficiency, with peak turnover around late 2021. The trend toward the later quarters indicates a slight decline, pointing to a potential slowdown in inventory turnover efficiency.

Receivables Turnover

The receivables turnover ratio shows moderate volatility between 7.3 and 9.16, peaking notably in the fourth quarter of 2021 at 9.16. The overall pattern indicates cycles of improved and weakened collection efficiency, with no clear linear trend. The consistency of values near the mid to upper 7 range in the most recent periods suggests steady collection performance, though slightly lower compared to the peak.

Working Capital Turnover

Data for working capital turnover is absent, precluding analysis of its trend or impact on overall operational efficiency.

Average Inventory Processing Period

The average inventory processing period fluctuated between 43 and 57 days over the quarters. There was an observable improvement during 2021, with the period decreasing from 51 to 43 days, indicating faster inventory processing. However, from mid-2022 onwards, the period stabilizes around the mid to high 40-day range, with occasional increases up to 57 days, potentially signaling occasional operational slowdowns or inventory accumulation.

Average Receivable Collection Period

The receivable collection period moved between 40 and 50 days, with a downward trend at the end of 2021, reflecting more rapid collections. Subsequent periods show some variability but generally maintain around the mid-40-day mark, indicating relatively consistent collection policies and performance.

Operating Cycle

The operating cycle, a combination of inventory and receivables periods, ranged from 83 to 106 days. The shortest cycles occurred at the end of 2021, showcasing heightened operational efficiency. However, periods following indicate an increase, reaching over 100 days, which may imply lengthening in cash conversion processes and possibly reflect slower turnover in inventory and receivables combined.

In summary, the data reflect an oscillating yet fairly stable operational performance in inventory and receivables management, with occasional improvements in processing periods. The absence of working capital turnover data limits the completeness of the operational analysis. The operating cycle data suggest variability in cash flow conversion efficiency that should be monitored closely, as increases in the cycle length may impact liquidity and working capital management.

The cost of sales demonstrates a recurring seasonal pattern, with peaks generally occurring in the fourth quarter of each year. There is an overall upward trajectory in the cost of sales from early 2021 through 2025, indicating increasing expenses associated with goods sold. Despite fluctuations, the figures tend to rise steadily, suggesting higher volume or inflationary pressures. The cost spikes prominently towards the end of each calendar year, consistent with anticipated seasonal demands.

Inventories exhibit variability within each year but without a clear directional trend over the longer term. The inventory levels fluctuate quarter-over-quarter, with occasional declines following inventory build-up periods. The numbers tend to peak mid-year or slightly later, then generally taper off. Inventory quantities do not show a sustained increase or decrease over the examined period, indicating possible management of stock to align with expected sales volume without significant accumulation or depletion over time.

The inventory turnover ratio maintains a moderate level with oscillations around an average of approximately 7. During some quarters, the turnover ratio increases, suggesting more efficient inventory management or stronger sales relative to inventory held. Conversely, dips in the ratio indicate periods where inventory might be moving more slowly. Notably, there is no strong upward or downward trend in turnover ratio, implying stable inventory utilization efficiency across the periods analyzed. Slightly lower turnover ratios towards the later quarters in some years could suggest a buildup in inventory or slower sales during those periods.

In summary, the financial data indicates a cost of sales with clear seasonality and a gradual increase over multiple years. Inventory levels fluctuate within quarters but remain stable over the long term, while inventory turnover ratios reflect consistent efficiency in inventory management without significant volatility or consistent change. The interplay between these metrics suggests a stable operational approach to balancing sales demand and inventory levels with cost control considerations.

The company’s net revenue demonstrates a consistent seasonal pattern with a tendency for higher revenue figures in the fourth quarter of each year. Across the examined periods, net revenue rises notably in the December quarter, evidencing the influence of year-end factors on sales performance. Despite some fluctuations, the overall trend reflects progressive growth from earlier years, with the most recent years maintaining similar seasonal peaks and troughs around the March and December periods.

Accounts and notes receivable, net of allowances, also show a pattern of fluctuations that correspond loosely with the net revenue trends, though the magnitude of changes in receivables is less pronounced. Receivables tend to increase in the quarters following higher sales, suggesting a buildup in outstanding amounts aligned with revenue spikes. However, the year-end quarters periodically exhibit some reductions in receivables, possibly due to increased collections or adjustments during those periods.

The receivables turnover ratio exhibits moderate variability but generally remains within a stable range between approximately 7.3 and 9.2 over the periods analyzed. This ratio indicates how efficiently the company is collecting its receivables relative to its sales. Higher turnover figures in the fourth quarters denote improved collection efficiency during peak sales seasons. Conversely, lower turnover rates in mid-year quarters may reflect relatively slower collections or increased credit sales. The stability of the turnover ratio over time suggests consistent credit management practices despite fluctuations in sales and receivables.

Net Revenue

Exhibits a strong seasonal pattern with higher results in the fourth quarter, reflecting typical year-end sales increases. Shows an overall growth trend over multiple years.

Accounts and Notes Receivable (Net)

Correspond to revenue trends with increased values following quarters of high sales, though changes are less volatile. Indicates periodic collection acceleration or write-offs, especially at year-end.

Receivables Turnover Ratio

Remains relatively stable, fluctuating moderately between approximately 7.3 and 9.2. Higher turnover rates occur in fourth quarters, showing efficient collection during peak sales periods; mid-year turnover dips slightly, reflecting slower receivables management.

Working Capital Trend

The working capital values exhibit significant fluctuations over the periods analyzed. Beginning with a negative position of -1,497 million USD in March 2021, it reaches a more pronounced negative peak of -5,710 million USD by December 2024. There are intermittent decreases and recoveries, with values oscillating but overall indicating an ongoing challenge in maintaining positive working capital. The trend reflects increasing short-term liabilities relative to current assets.

Net Revenue Trend

Net revenue demonstrates a consistent upward movement across the quarters. Starting at approximately 14,820 million USD in the first quarter of 2021, revenues increase steadily, hitting nearly 27,784 million USD by December 2024. The pattern indicates strong sales growth with quarter-over-quarter increases, suggesting effective revenue generation and possibly successful product or market strategies.

Working Capital Turnover

The working capital turnover ratio is not available for the periods reviewed, so no direct assessment of efficiency in utilizing working capital to generate revenue can be made from these data.

Summary and Insights

While net revenue shows robust growth indicating healthy sales momentum, the persistent negative and increasingly larger working capital deficits could be a cause for concern. This may imply potential liquidity constraints or aggressive short-term financing policies. The inability to provide working capital turnover ratios limits precise evaluation of operational efficiency in managing working capital relative to sales generation. The company’s focus may need to be directed toward improving short-term asset management to better support its expanding revenue base and ensure sustainable financial health.

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating pattern over the observed period. Initially, it experienced a decline from 7.1 to 6.82 but then showed improvement and peaked at 8.53 in late 2021. Following this peak, the ratio generally decreased with minor recoveries, maintaining values mostly between 7.0 and 8.0. The most recent data indicate a gradual decline again, reaching 6.98 by late 2025. This suggests periods of varying efficiency in moving inventory relative to sales.

Average Inventory Processing Period

The average inventory processing period shows an inversely related trend to inventory turnover. It started around 51 days, briefly increased to 54 days, and then decreased to a low of 43 days in late 2021. Thereafter, it fluctuated mostly between 46 and 52 days, occasionally spiking up to 57 days in the later quarters. The number of days generally increases when turnover decreases, reflecting longer durations for inventory to be sold or used.

Trend Analysis

Overall, the data indicate a moderately stable inventory management performance with cyclical fluctuations. The highest inventory turnover and lowest processing periods occur in late 2021, indicating peak efficiency during that quarter. Subsequent quarters show some erosion in efficiency, highlighted by the gradual increase in processing days and decrease in turnover ratios. The recent periods denote a softening in inventory management, potentially signaling slower movement of goods or changes in sales patterns.

Insights

The inverse relationship between inventory turnover and processing period is consistent throughout the timeline, which aligns with standard inventory management dynamics. Attention to periods with lower turnover and higher processing duration is advisable, as these may point to rising carrying costs or potential excess stock. Periodic review of inventory strategies may help to regain or maintain optimal turnover rates and minimize the average processing period.

The analysis of the receivables turnover ratio and the average receivable collection period over multiple quarters indicates fluctuating trends in the efficiency of receivables management.

Receivables Turnover Ratio

The receivables turnover ratio shows variability across the quarters. Starting at 8.03 in March 2021, it slightly declined to 7.67 by June 2021 but rebounded to 9.16 in December 2021, marking the highest point within the observed period. Post this peak, the ratio declined again and varied between the range of approximately 7.3 and 8.9 in subsequent quarters. The fluctuations suggest periodic changes in the company's effectiveness in collecting receivables. The ratio's movement closer to 7.3 in later periods indicates a slight deterioration in collection efficiency compared to earlier periods.

Average Receivable Collection Period

The average receivable collection period exhibits an inverse pattern relative to the turnover ratio, as expected. It started at 45 days in March 2021, increased to 48 days by June 2021, and then decreased to a low of 40 days in December 2021, which corresponds to the peak in receivables turnover.

Following this, the collection period fluctuated mostly between 43 and 48 days, indicating variability but a general plateau within this range. Notably, in the most recent quarters, the period extended to 49 and 50 days, implying a trend towards longer credit collection times.

Overall Insights

The inverse relationship between the two metrics remains consistent throughout the observed periods. Periods with higher turnover ratios correspond to shorter collection periods, reflecting efficient credit management. However, the recent downward trend in receivables turnover alongside increasing collection days suggests a potential relaxation in credit collection discipline or changes in sales terms and customer payment behaviors.

These trends should be monitored closely, as prolonged collection periods may impact the company’s cash flow and liquidity position.

The data shows the trends in key efficiency metrics over multiple quarters, reflecting the company's management of inventory, receivables, and the overall operating cycle.

Average Inventory Processing Period

The average inventory processing period fluctuates across the reported quarters, with values ranging from a low of 43 days to a high of 57 days. Initial periods in 2021 show a general decrease from 51 to 43 days, indicating improved inventory turnover. However, there are intermittent rises such as 50 days in mid-2022 and a peak of 57 days in mid-2025. Toward the most recent quarters, the metric appears somewhat elevated compared to earlier periods, which may imply a slowdown in inventory movement or accumulation.

Average Receivable Collection Period

The average receivable collection period remains relatively stable, mostly oscillating within the 40 to 50 days range. There are minor periodic increases and decreases, such as a dip to 40 days in late 2021 and gradual increases reaching up to 50 days by mid to late 2025. The overall pattern suggests consistent but slightly weakening efficiency in collecting receivables over the analyzed timeframe.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, mirrors the fluctuations observed in the underlying components. It started at 96 days in early 2021, decreased to 83 days by the end of that year, then showed a general upward trend reaching 106 days mid-2025, representing an extended operating cycle. The elongation during the latter periods indicates that the company may be facing longer cash conversion times, potentially due to slower inventory turnover, increasing receivables, or a combination of both factors.

In summary, the company’s operational efficiency demonstrated through these metrics has varied across the periods, with some improvement in inventory handling in earlier quarters, followed by increases in both inventory processing and receivable collection durations in recent periods. The extended operating cycle in later quarters warrants attention, as it can impact liquidity and working capital management.