PepsiCo Inc. (NASDAQ:PEP)

The analysis of the quarterly financial ratios and related periods reveals several noteworthy trends and variations over time.

Inventory Turnover

The inventory turnover ratio demonstrates fluctuations with a general range between approximately 6.4 and 8.5 times per period. The ratio reached a peak around early 2022 and again in late 2024, suggesting periods with improved inventory management and faster stock movement. However, there is a tendency toward slight declines in some later quarters, notably in mid-2025, indicating potentially slower inventory turnover during those times.

Receivables Turnover

Receivables turnover exhibits variability with ratios mostly oscillating between 7.3 and 9.2. Peaks occurred in early 2022 and the first quarter of 2025, reflecting periods when receivables were collected more rapidly. Mid-2025 shows a modest decline, which could indicate a slowdown in collections or a lengthening of credit terms extended to customers.

Average Inventory Processing Period

The average inventory processing period, measured in days, generally ranges between 43 and 57 days. The shortest durations correspond with intervals of higher inventory turnover, such as early 2022 and late 2023. Conversely, longer processing periods are observed in late 2025, aligning with decreased inventory turnover, indicating potential inefficiencies or higher inventory holding during those periods.

Average Receivable Collection Period

This period mostly spans from 40 to 50 days. The lowest collection durations are seen in early 2022 and early 2025, indicating efficiency in customer payments during these times. Higher values toward late 2025 suggest a potential delay in receivable collection, which may impact cash flow.

Operating Cycle

The operating cycle, representing the combined length of inventory processing and receivables collection periods, varies considerably between approximately 83 and 106 days. Shorter operating cycles in early 2022 and early 2025 imply more efficient operations and a quicker conversion of inventory and receivables into cash. The extension of the operating cycle towards the end of 2025 may suggest operational slowdowns or increased days sales outstanding.

In summary, the financial activity shows cyclical fluctuations consistent with changing operational efficiency. Periods with higher turnover ratios correspond with reduced processing and collection days, indicating tighter management of working capital components. However, certain quarters, especially in late 2025, indicate slower turnover and longer operating cycles, which might warrant further investigation to understand underlying causes and potential impacts on liquidity and performance.

Cost of Sales

The cost of sales generally shows a pattern of quarterly fluctuations with a notable seasonal increase in the fourth quarter of each year. From early 2020 to the end of 2020, there is an upward trend culminating in a peak of approximately 10,426 million US dollars in Q4 2020. This seasonal pattern repeats through subsequent years, with the fourth quarter consistently showing the highest costs, such as approximately 13,420 million in Q4 2022 and about 13,181 million in Q4 2024. The first quarter typically reflects the lowest values within each year, followed by an increase in the middle quarters and a peak towards year-end. Despite quarterly fluctuations, there is a clear long-term increasing trend in the cost of sales over the observed periods.

Inventories

Inventory levels display an incremental increase over the timeframe with some periodic declines. Initially, inventories rose steadily from 3,600 million US dollars in Q1 2020 to a peak of around 5,006 million in mid-2021. Following this peak, there is a mild decline and fluctuation around 4,300 to 5,300 million until early 2023. From 2023 onward, inventories resume an upward trajectory, reaching a high near 6,487 million US dollars in mid-2025. While inventories increase overall, there is some variability indicating adjustments in stock levels possibly related to demand or supply chain dynamics.

Inventory Turnover Ratio

The inventory turnover ratio varies between approximately 6.4 and 8.5 over the quarters, suggesting fluctuations in the efficiency of inventory management relative to sales. Notable peaks occur in Q4 2020 (8.11) and Q1 2022 (8.53). The turnover tends to decline slightly after peaks, with the lowest value observed near 6.44 in Q3 2025, indicating slower inventory movement or higher stock levels compared to cost of sales at these points. Overall, the ratio tends to stabilize around the 7 to 7.8 range, implying relatively consistent inventory utilization with some seasonal and cyclical variation. The slight downward trend in recent periods may warrant attention to inventory management efficiency.

Summary

The analysis highlights a consistent seasonal pattern in cost of sales, peaking in the fourth quarter each year, which aligns with typical market or operational cycles. Inventories show a gradual increase over the multi-year period with some uncertainty and correction phases, potentially reflecting supply chain or demand variability. Inventory turnover indicates generally stable inventory management practices but displays some weakening in efficiency in the most recent quarters. Together, these trends suggest growing scale of operations while highlighting areas for monitoring inventory control and cost containment in response to cyclical and operational changes.

The analyzed data reveals several important trends in the company's financial performance over multiple quarters.

Net Revenue

The net revenue demonstrates a generally increasing trend over the analyzed period, with noticeable seasonal fluctuations and quarter-to-quarter variability. Revenue values tend to peak at the end of each calendar year, with the highest recorded values occurring consistently in the fourth quarters. The first quarters tend to show lower revenue figures compared to other quarters within the same year. There is an overall upwards trajectory from 2020 through the projected periods in 2025, reflecting growth in sales or operational scale over time.

Accounts and Notes Receivable, less Allowance

The accounts and notes receivable balance exhibits a moderate upward trend overall, although it fluctuates between quarters and years. The amounts tend to peak in the third quarters and decline in the fourth quarters frequently, contrasting with the net revenue pattern. The receivables values appear somewhat correlated with changes in net revenue, as increases in revenue generally coincide with higher receivables balances, which is typical of growing sales extending credit to customers.

Receivables Turnover Ratio

The receivables turnover ratio indicates how efficiently the company collects its receivables and converts them into cash. This ratio fluctuates between approximately 7.3 and 9.2 across the quarters, without a clear long-term upward or downward trend. Periodic dips in turnover suggest episodes of slower collection, while spikes correspond to more efficient receivables management. The variability in turnover ratio alongside generally rising receivables and revenues suggests the company maintains a relatively consistent credit policy and collection efficiency amid growing scale.

In summary, the company displays a positive growth trend in net revenue supported by a corresponding increase in accounts receivable. Collection efficiency, as reflected by the receivables turnover ratio, remains stable with short-term oscillations, indicating consistent management of credit risk and cash flow collection relative to expanding business volumes.

Working Capital

The working capital exhibits a pronounced negative trend over the analyzed periods. Starting from a positive 2,190 million USD, it swiftly turns negative and deepens substantially in subsequent quarters, reaching its lowest levels beyond -8,100 million USD. This persistent negative working capital suggests increasing short-term liabilities relative to current assets or aggressive working capital management. The notable fluctuations and consistent negative values from mid-2020 onwards indicate potential liquidity management challenges or strategic inventory and payables policies.

Net Revenue

Net revenue demonstrates a robust upward trajectory throughout the periods. Beginning at approximately 13,881 million USD, revenues steadily climb in most quarters, with occasional seasonal or periodic dips. The figures increase to exceed 27,000 million USD by the end of 2022, indicating strong sales growth. This pattern continues into 2024 and 2025, with revenues generally rising, albeit with some fluctuations, consolidating an overall trend of increasing top-line performance.

Working Capital Turnover

The working capital turnover ratio data is missing, thus preventing direct analysis of operational efficiency related to working capital use over the periods.

General Trends and Insights

The data reflects a scenario where revenue growth is strong and consistent, signaling effective sales expansion or pricing strategies. However, the aggravation of negative working capital suggests a divergence from traditional liquidity profiles, which might reflect changes in business models such as increased payables, reduced inventory, or accelerated receivables collections. The juxtaposition of rising net revenue and increasingly negative working capital warrants further examination of cash flow cycles, supplier terms, and inventory management practices to ensure sustainable liquidity and operational continuity.

Inventory Turnover

The inventory turnover ratio exhibits fluctuations over the observed periods, generally ranging between approximately 6.4 and 8.5. Initially, the ratio increased from 7.62 to a peak of 8.53, reflecting an acceleration in inventory movement. Subsequently, the ratio experienced minor oscillations with a gradual decline, falling into the mid-6 to mid-7 range towards the later periods. This pattern suggests some variability in the efficiency of inventory management and sales conversion over time, without a clear long-term upward or downward trend.

Average Inventory Processing Period

The average inventory processing period, expressed in days, inversely correlates with the inventory turnover ratio. The processing period fluctuates between 43 and 57 days. Early in the dataset, the period shortened from 54 days to 43 days, indicating quicker inventory turnover. However, subsequent periods show an increase to as much as 57 days, implying slower inventory processing at times. The cyclical changes in days inventory outstanding suggest periodic adjustments in inventory handling or sales patterns, consistent with the inventory turnover data.

Overall Analysis

The data points to a dynamic but relatively stable inventory management scenario. Peaks and troughs in turnover and processing times likely reflect operational or market-related influences affecting inventory flow. The interplay between turnover and processing period aligns with standard expectations, where higher turnover corresponds with shorter processing times. No sustained trend of continuous improvement or deterioration is evident, suggesting the company maintains a consistent but variable approach to inventory metrics over the examined quarters.

The analysis of the receivables turnover ratio and the average receivable collection period over multiple quarterly periods reveals certain trends and fluctuations that provide insights into the company's credit management efficiency and cash conversion cycle.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates variability in the range between approximately 7.31 and 9.16 over the observed quarters. Starting from an initial value around 8.37, the ratio slightly declined over the following quarters, reaching lows near 7.6 to 7.8, followed by intermittent recoveries to above 8.0, peaking at about 9.16 in one quarter. Towards the later periods, the turnover ratio again declined and stabilized in the mid to upper 7s and low 8s, with the latest data points around 7.31 to 7.41.

Average Receivable Collection Period

This metric exhibits an inverse movement relative to the turnover ratio, consistent with financial principles. Initially, the collection period remained around 44 to 45 days, then increased to a peak near 48 days during mid-period quarters. A subsequent downward movement brought the collection days back near 40 to 43 in some quarters, followed by another increasing phase reaching up to 50 days in the final quarter observed. This pattern indicates some variability in the time required to convert receivables into cash, fluctuating between approximately 40 to 50 days.

Interpretation and Insights

The fluctuation in the receivables turnover ratio coupled with the corresponding inverse trend in the average collection period suggests periodic changes in credit policies, customer payment behaviors, or sales composition. Periods of higher turnover ratio and lower collection days indicate improved efficiency in receivables management and faster cash inflows. Conversely, phases of lower turnover and longer collection periods reflect extended credit terms or slower collection effectiveness.

Overall, the data reveals a moderate level of variability without extreme volatility, indicating that while there have been shifts in receivables management efficiency, they are relatively controlled and cyclical. The company may consider investigating the drivers behind these changes to optimize working capital and improve liquidity management.

The analysis of the financial data reveals observable trends in working capital management metrics, specifically focusing on the inventory processing period, receivable collection period, and operating cycle across multiple quarters.

Average Inventory Processing Period

This metric exhibits fluctuations throughout the observed periods. Initially, the processing period increased from 48 days to a peak of 54 days, indicating a lengthening time in inventory turnover. Subsequently, there is a notable decline to 45 days, suggesting improved inventory management or faster turnover. However, the period again shows alternating increases and decreases, reaching a maximum of 57 days in one of the later periods before settling back around the low 50s range. These variations imply challenges in maintaining stable inventory efficiency, possibly influenced by external supply chain factors or internal operational adjustments.

Average Receivable Collection Period

The receivable collection period remains relatively stable, fluctuating mainly between 40 and 50 days. There is no clear upward or downward trend, indicating consistent credit collection policies and customer payment behaviors. Minor variations may reflect seasonal influences or changes in customer mix but overall, the period maintains a steady range, which is favorable for predictable cash flow management.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection durations, mirrors the movements in the underlying components. It initially rises from 92 days to a high above 100 days, reflecting periods where inventory processing notably prolongs the cycle. This is followed by declines to the high 80s and low 90s range, indicating improved efficiency. Towards the end of the dataset, the cycle lengthens again, reaching a maximum of 106 days, before decreasing slightly. The operating cycle’s variability suggests that the company's overall working capital efficiency experiences periodic disruptions, potentially caused by fluctuating inventory handling times while receivable collection remains steady.

In summary, the inventory processing period drives most of the variability observed in the operating cycle, while the receivable collection period remains relatively consistent. The data indicates intermittent challenges in inventory management efficiency, which in turn affect the length of the operating cycle. The company may benefit from focused efforts to streamline inventory turnover to enhance working capital management further.