PepsiCo Inc. (NASDAQ:PEP)

Inventory Turnover

The inventory turnover ratio demonstrates moderate fluctuations over the observed periods. Starting at 7.62, it decreased slightly to 6.82 before peaking at 8.53. Following this peak, the ratio generally trended downward with some variability, ending at 6.44. This indicates variability in how efficiently inventory is managed, with occasional improvements but an overall mild decline in turnover speed.

Receivables Turnover

The receivables turnover ratio shows a pattern of initial decline from 8.37 to 7.67, followed by a recovery reaching a peak of 9.16. Subsequently, it declines and fluctuates moderately, ending lower at 7.41. This pattern reflects variations in the collection efficiency of receivables, suggesting periods of improved collection followed by some easing in collection pace.

Average Inventory Processing Period

The average inventory processing period has exhibited some variation, initially increasing from 48 days to a peak of 54 days, then declining to a low of 43 days, indicating faster inventory turnover. Later periods show a return to the mid-40s to low 50s range with a slight increase toward the end, reaching 57 days. This suggests that at times inventory is held longer, possibly reflecting changes in supply chain or demand conditions.

Average Receivable Collection Period

The average receivable collection period generally fluctuates mildly around mid-40s days, with a low of 40 days and a high nearing 49 days toward the end of the period. These fluctuations indicate some variability in credit collection policies or customer payment behaviors but without a clear long-term trend.

Operating Cycle

The operating cycle shows a correlation with inventory and receivables periods, ranging between 83 and 106 days. After peaking at 102 days early in the data, it decreases to around 83 days, then fluctuates, with the longest operating cycle recorded near the end at 106 days. This suggests varying efficiency in the overall process from inventory acquisition to receivables realization, with occasional lengthening of the cycle potentially indicating slower operational throughput.

The cost of sales demonstrates a generally upward trend across the quarters, beginning at 6,127 million US dollars and rising to a peak of 13,420 million US dollars by the end of 2020. Subsequent quarters in 2021 and 2022 show fluctuations but maintain an overall high level, with some quarters registering increases and others slight decreases. From 2023 onwards, the cost of sales remains elevated with minor oscillations around levels between approximately 7,900 and 13,200 million US dollars, indicating sustained high sales costs over the period analyzed.

Inventories reveal consistent growth throughout the timeline under review. Starting at 3,600 million US dollars, the inventory values increase steadily each quarter, reaching 6,487 million US dollars by the second quarter of 2025. This gradual accumulation suggests either an increase in stock held or a strategic build-up of inventory over time. The trend lacks significant declines, indicating stable inventory management or anticipation of higher demand.

Regarding inventory turnover ratios, data from the second quarter of 2020 onwards reveal a fluctuating but generally stable pattern. Values oscillate around 7, with a range between 6.44 and 8.53. The turnover tends to show moderate variation, reflecting changes in how quickly inventory is converted into sales. Notably, the highest turnover appears at the end of 2020, after which it experiences some decreases but remains within a relatively tight band, suggesting consistent inventory efficiency throughout the periods measured.

Overall, the cost of sales and inventory levels indicate expansion in business volume or complexity, while the inventory turnover ratio reflects relatively stable operational efficiency in managing stock over time despite these increases.

Cost of Sales

General upward trend with fluctuations; peaks observed at end of 2020 and sustained high levels thereafter.

Inventories

Consistent increase over the periods, doubling approximately from start to end of the timeline.

Inventory Turnover Ratio

Stable but variable around an average of 7, indicating steady conversion of inventory into sales with some quarters showing efficiency gains.

Net Revenue

The net revenue of the company exhibits a consistent seasonal pattern, with higher values reported in the fourth quarter of each year. Across the observed periods, net revenue shows an overall upward trend despite some fluctuations. For example, comparing year-end quarters, revenue increased from $22,455 million in December 2020 to $27,996 million in December 2022, indicating growth over the two-year span. Similarly, the first quarters generally display lower revenue compared to the fourth quarters but show gradual improvement over time, with values moving from approximately $13,881 million in March 2020 to $17,919 million in March 2025, underscoring steady progress in sales volume or pricing.

Accounts and Notes Receivable, Less Allowance

The accounts and notes receivable balance follows a moderate upward trend with noticeable seasonal fluctuations. The balances tend to peak around the third quarter or early fourth quarter and dip slightly afterwards. For instance, starting at $8,477 million in March 2020, the receivable amount increased to $12,390 million by September 2025. This trend suggests higher credit sales or slower collection periods in some quarters. However, the variation is not excessively volatile, implying reasonably stable receivables management.

Receivables Turnover Ratio

The receivables turnover ratio data, available for partial periods starting mid-2020, reveals a fluctuating but relatively consistent range between approximately 7.4 and 9.2. The ratio tends to peak towards the end of the second quarter or beginning of the third quarter each year, indicating more efficient collection during these times. Lower turnover ratios often appear in the late third and fourth quarters. The gradual decline in turnover ratios over the years, for example from around 9.16 in March 2021 to roughly 7.41 in June 2025, could imply a lengthening of the collection period or less effective receivables management over time.

Summary of Trends and Insights

Overall, the financial data show sustained revenue growth with clear seasonal patterns, reflecting cyclical business activity or market demand variations. The increase in accounts receivable balances aligns with revenue growth but suggests potential challenges in maintaining collection efficiency, as indicated by the slight downward trend in receivables turnover ratios. Management might monitor these trends closely to optimize working capital and cash flow, balancing sales growth with effective receivables collection practices.

The data reveals distinct trends in several key financial metrics over a multi-year span. The working capital exhibits a persistent negative balance for most of the periods analyzed, indicating that current liabilities consistently exceed current assets. Although the value fluctuates quarter to quarter, it shows a general decline, reaching its most negative points around late 2024 and mid-2025. This trend reflects potential liquidity challenges or a business model reliant on significant short-term liabilities.

Net revenue demonstrates an overall upward trajectory with seasonal fluctuations corresponding to quarterly reporting periods. Revenues increase notably during the fourth quarter of each year, peaking around December dates, which may imply strong holiday sales or year-end demand. Despite some variability, the revenue figures show consistent growth when comparing beginning and ending periods, underscoring a positive sales performance over time.

The working capital turnover ratio, which would normally gauge the efficiency of using working capital to generate sales, is not provided. However, given the negative working capital values, this ratio might be less meaningful; negative working capital suggests a unique operational model or financing strategy.

In summary, the patterns indicate that while revenue growth remains robust and seasonal, the company is managing with consistently negative working capital. This situation suggests an operational reliance on current liabilities, which may warrant attention regarding liquidity risk and capital structure management moving forward.

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating pattern over the reported quarters, starting at 7.62 and experiencing a decline to 6.82 by the third quarter of 2020. Subsequently, there is an increase that peaks at 8.53 in the first quarter of 2022. After this peak, the ratio generally trends downward with some variations, decreasing to a low of 6.44 by the second quarter of 2025. This suggests that inventory was sold and replaced less frequently over time, particularly toward the later periods. The fluctuations indicate variability in the efficiency of inventory management or changes in sales velocity across different quarters.

Average Inventory Processing Period (number of days)

The average inventory processing period inversely correlates with the inventory turnover ratio, as expected. It begins at 48 days and rises to a peak of 54 days in the third quarter of 2020, coinciding with the lower turnover ratios observed. Following this peak, the processing period declines to 43 days in the first quarter of 2022, aligning with the highest inventory turnover noted. Thereafter, the days exhibit moderate fluctuations, trending upward again in the final reported quarter to 57 days, indicating longer holding periods of inventory. This suggests that, particularly in the most recent period, inventory remains in stock for a longer duration before being processed or sold.

Insights and Interpretation

The overall analysis reveals an interplay between inventory turnover and processing period that reflects changing operational dynamics. Higher inventory turnover in early 2022 corresponds with shorter processing periods, which could imply efficient stock management and strong sales during that time. Conversely, lower turnover and longer processing times in later quarters may indicate slower sales, potential overstocking, or supply chain challenges. The variability also hints at cyclical factors or external impacts influencing inventory handling efficiency. Management may benefit from investigating the drivers behind these fluctuations to optimize inventory levels and improve cash flow management.

The receivables turnover ratio demonstrates some variability over the observed quarters, with values generally fluctuating between approximately 7.4 and 9.2. At the start of the available data, the ratio is around 8.37, followed by a slight decline and subsequent oscillations. Notably, there is a peak at 9.16, indicating a period of more frequent receivables collection, followed by a downward trend toward values near 7.4 in later quarters. Such fluctuations suggest periodic changes in the efficiency of receivables management.

The average receivable collection period shows an inverse pattern relative to the receivables turnover ratio, ranging mostly between 40 and 49 days. Initially, the collection period is around 44-45 days, increasing to values near 48 days during certain quarters, implying longer durations to collect receivables in those periods. There is a noticeable decrease to approximately 40-41 days in some quarters, correlating with increases in turnover ratios, which suggests an improvement in collection efficiency.

Overall, the trends indicate alternating phases of stronger and weaker receivables collection efficiency. Periods of higher receivables turnover correspond with shorter average collection periods, which is consistent with quicker conversion of receivables into cash. Conversely, lower turnover ratios align with extended collection periods, potentially signaling slower cash inflows. These trends may reflect changes in credit policy, customer payment behavior, or external economic conditions impacting the company's receivables management over time.

Receivables Turnover Ratio Trends

Fluctuated between roughly 7.4 and 9.2, with no clear sustained upward or downward trajectory, indicating variable efficiency in collecting receivables.

Average Receivable Collection Period Trends

Varied between about 40 and 49 days, generally moving inversely to the turnover ratio, reflecting changes in collection speed.

Relationship Between Metrics

Higher turnover ratios correspond with shorter collection periods, suggesting periodic improvements in cash collection efficiency, while lower turnover ratios indicate slower collection.

Implications

The variability in these metrics suggests the company experiences alternating cycles of receivables management performance, likely influenced by internal credit policies and external market conditions.

Average Inventory Processing Period

The average inventory processing period exhibits some fluctuations over the observed quarters. Starting from 48 days in March 2021, it increased to a peak of 54 days in September 2021. Subsequently, it decreased to 43 days in March 2022, followed by cyclical variations ranging between 46 and 52 days until the end of 2023. In 2024, the period again showed variability, with a low of 46 days in March and a peak of 57 days in June 2025. Overall, there is no consistent upward or downward trend, but rather intermittent rises and falls, indicating variable inventory turnover efficiency.

Average Receivable Collection Period

The average receivable collection period remains relatively stable with modest variability. Beginning at 44 days in March 2021, it increased slightly to 48 days by September 2021, then dropped to 40 days in March 2022. The period oscillates around the low to mid-40s throughout the following quarters, with occasional brief increases to 47 or 49 days towards the end of the data set. This pattern suggests a relatively consistent collection process with occasional minor delays.

Operating Cycle

The operating cycle shows a pattern largely mirroring the combined behavior of the inventory and receivable periods. Starting at 92 days in March 2021, it peaked at 102 days in September 2021, then decreased to 83 days by March 2022. The cycle then oscillated between approximately 89 and 98 days until the end of 2023. In 2024 and 2025, the cycle again varies, reaching a new high of 106 days in June 2025. This indicates periods of longer cash conversion cycles interspersed with shorter ones, reflecting variability in the overall operational efficiency.

Summary of Trends

Across all three metrics, the data reveals a pattern of cyclical fluctuations rather than stable trends. Inventory processing periods and operating cycles show significant variance, suggesting changes in inventory management and cash conversion times over successive quarters. Meanwhile, receivable collection periods remain comparatively steady, indicating more consistent credit and collection policies. The overall picture points towards operational cycles influenced primarily by inventory turnover variations with relatively stable receivables management.