Coca-Cola Co. (NYSE:KO)

Inventory turnover

The inventory turnover ratio displayed a fluctuating trend over the analyzed periods. Initially, it increased from 4.04 to a peak of 4.74 but generally declined afterward, reaching lower levels around 3.57 to 3.88 in the later periods. This pattern suggests a gradual slowdown in the rate at which inventory is sold and replaced, indicating potential changes in inventory management or sales velocity.

Receivables turnover

Receivables turnover showed an overall upward trend with some variability. Starting from 8.89, it increased steadily to values above 12 by the end of the dataset, with intermittent peaks and dips. This indicates improvements in the efficiency of collecting receivables, reflecting potentially stronger cash flow management and credit control practices.

Working capital turnover

The working capital turnover ratio experienced substantial volatility. After an initial decline, it surged dramatically to a high of 62.92 in one of the later periods, followed by a decrease to approximately 10. This considerable fluctuation suggests significant changes in working capital usage and efficiency, possibly due to seasonal influences, operational adjustments, or shifts in current asset and liability management.

Average inventory processing period

The average inventory processing period generally ranged between 77 and 102 days, with minor fluctuations throughout the periods. There were peaks around 98 to 102 days in the later periods, which correlate with declining inventory turnover, indicating that inventory was held longer before being sold. This could imply increased stock levels or slower sales.

Average receivable collection period

This metric showed a decreasing trend from around 41 days to the high 20s near the end of the timeline, with some variation in intermediate periods. Reduced receivables collection periods denote improved efficiency in collecting payments from customers, enhancing liquidity.

Operating cycle

The operating cycle fluctuated within a range of approximately 111 to 134 days. Early periods showed a gradual decline, but later periods witnessed an increase, peaking near 134 days. The variations in operating cycle length reflect combined influences of inventory processing and receivable collection periods, suggesting cyclical changes in the company's operational efficiency.

The financial data reveals several notable trends in cost of goods sold, inventories, and inventory turnover ratios over the observed periods.

Cost of Goods Sold (COGS)

The cost of goods sold experiences fluctuations throughout the timeline. Initially, there is a gradual increase from approximately 3505 million USD to a peak of around 4830 million USD in mid-2022. Subsequently, COGS exhibits a pattern of oscillation, with decreases followed by intermittent rises but does not consistently return to the previous peak levels. Towards the latest periods, a downward trend is apparent, with values reducing to the 4100-4800 million USD range. This suggests some variability in production or procurement costs, potentially influenced by market or operational conditions.

Inventories

Inventories show a general upward trajectory over the periods under review. Starting at roughly 3356 million USD, inventory levels increase steadily, reaching a high near 5100 million USD in the later months. Minor fluctuations are present but the overall trend indicates accumulation of inventory. The significant rise, especially evident after mid-2022, may reflect greater stockpiling or slower inventory turnover due to changes in demand, supply chain factors, or strategic inventory management.

Inventory Turnover Ratio

The inventory turnover ratio, reflecting the efficiency of inventory management, reveals a declining trend over time. Initially improving from 4.04 to 4.74 in late 2021 and mid-2022, the ratio begins to fall consistently afterward, reaching levels around 3.5 to 3.9 in the latest periods. This decrease implies slower movement of inventory relative to sales, which could indicate increased stock levels relative to sales volumes or less efficient inventory utilization.

In summary, cost of goods sold shows variability with peaks in early to mid-2022, followed by moderate declines. Inventories progressively build up, suggesting higher stock holdings. The inventory turnover ratio's systematic decrease highlights a reduction in inventory movement efficiency, potentially signaling challenges in matching inventory levels with sales or changes in product demand patterns.

Net Operating Revenues

The net operating revenues exhibit a generally increasing trend over the periods analyzed, starting from $9,020 million and reaching $12,455 million by the end of the timeline. Fluctuations are observed within individual quarters, with peaks typically occurring in the middle to later quarters of each fiscal year. Notable increases are seen around mid-2022 and mid-2024, although some quarters such as late 2022 and late 2023 show a slight decline compared to the preceding quarter.

Trade Accounts Receivable, Less Allowances

The trade accounts receivable values demonstrate variability across the periods with intermittent peaks and troughs. Initially, there is a rise from $3,762 million to $4,641 million by early 2022, followed by a downward adjustment towards the end of 2022. Mid-year 2023 and mid-2024 again show higher values, indicating possible seasonal effects or changes in credit policies. The overall pattern does not show a consistent directional trend but reflects periodic increases and decreases potentially linked to revenue cycles and collection efficiency.

Receivables Turnover Ratio

The receivables turnover ratio indicates an improving efficiency in collecting receivables over most periods. Starting at 8.89, the ratio increases steadily, peaking above 13 in several quarters such as December 2021, September 2023, and December 2024. The higher turnover values suggest enhanced collection processes or shorter collection periods during these times. Some dips occur, particularly in early 2022 and early 2024, but overall the trend points towards increasing effectiveness in receivables management.

Overall Insights

The data reflect a company experiencing growth in operating revenues with some seasonal or cyclical fluctuations. Despite variability in trade accounts receivable, the improving receivables turnover ratio suggests effective management of credit and collections over time. This coordination between revenue increases and receivables efficiency is indicative of strengthening operational performance. The volatility in receivable balances, however, signals the necessity for ongoing monitoring of credit risk and collection practices. Quarterly fluctuations in both revenues and receivables imply impacts from market seasonality or strategic timing of sales and collections activities.

The analysis of the quarterly financial data reveals several notable trends regarding working capital, net operating revenues, and working capital turnover over the observed periods.

Working Capital

Working capital demonstrated considerable fluctuations throughout the period. Initially, there was a general upward trend from US$5,446 million to a peak of US$8,250 million by October 2021, followed by a sharp decline to US$2,595 million by December 2021. Subsequent quarters showed a pattern of volatility, with values rising and falling irregularly. In 2024 and 2025, the working capital remained relatively lower compared to earlier peaks, exhibiting values mostly in the range of approximately US$700 million to US$4,700 million, which indicates increased variability and less stability in working capital management.

Net Operating Revenues

Net operating revenues showed a generally positive trend over the periods analyzed. Starting from US$9,020 million in April 2021, revenues increased to a high of US$11,972 million in June 2023. Following this peak, revenues displayed some volatility but maintained an elevated level above US$11 billion in most recent quarters. The revenue streams suggest steady growth with occasional fluctuations, reflecting possible seasonal effects or operational factors influencing quarterly sales.

Working Capital Turnover Ratio

The working capital turnover ratio exhibited pronounced variability, indicating changes in how efficiently working capital supports net operating revenues. Early quarters showed moderate turnover ratios between approximately 4.5 and 6.1. There was a substantial spike in December 2021 to a peak of 14.9 and a further dramatic increase in March 2024 to an exceptionally high ratio of 41.66. Several quarters thereafter displayed elevated ratios ranging from about 10 to over 60, indicating periods of high operational efficiency or possibly low working capital levels relative to revenues. The wide fluctuations in turnover ratios suggest dynamic adjustments in operational management or shifts in working capital strategies.

Inventory Turnover

The inventory turnover ratio exhibits noticeable fluctuations throughout the observed quarters. It peaked initially at 4.67 in October 2021 and generally showed a declining trend starting in early 2023, reaching its lowest point of 3.57 by June 2025. This downward movement in turnover indicates a reduction in the frequency with which inventory is sold and replenished over time, suggesting potential challenges in inventory management or sales velocity during the latter periods. Some quarters showed slight recoveries, such as in September 2023 and December 2024, but these were not sustained.

Average Inventory Processing Period

The average inventory processing period, measured in days, inversely complements the inventory turnover trend. Initially, it decreased from 90 days in April 2021, reaching a low of 77 days in September 2022 which aligns with the high turnover ratio earlier. However, starting in early 2023, the processing period extended significantly, peaking at 102 days in both June and September 2025. This extension suggests that inventory remains in stock for longer durations before being sold, which could reflect decreased demand, slower sales, or inefficiencies in inventory clearance.

Relationship Between Metrics

The inverse correlation between inventory turnover and average inventory processing period is consistent with typical inventory dynamics. When turnover decreases, the inventory processing period increases, indicating slower movement of goods. This pattern across the quarters signals a potential area of concern regarding inventory management effectiveness and demand forecasting accuracy. Timely action may be required to optimize inventory levels and enhance sales performance.

Receivables Turnover Ratio

The receivables turnover ratio exhibits a generally increasing trend with some fluctuations. It rose from 8.89 in April 2021 to a peak of 13.42 in December 2023. Notably, after reaching this high, the ratio experienced a decline to around 10.22 by June 2024, followed by a recovery, reaching 13.19 by December 2024. In the most recent periods through September 2025, the ratio stabilized around 11 to 12, indicating a consistent capacity to efficiently collect receivables over these quarters.

Average Receivable Collection Period

The average receivable collection period shows an inverse pattern to the turnover ratio, as expected. It decreased significantly from 41 days in April 2021 to a low of 27 days in December 2023, highlighting an improvement in the efficiency of receivables collection. After this low point, the collection period increased modestly to 36 days in June 2024, before declining again toward the end of 2024 and remaining within the 28 to 32 days range through September 2025. This pattern indicates a general trend toward faster collections with some temporary extensions in certain quarters.

Overall Interpretation

The analysis of both ratios suggests an overall enhancement in credit management and collections efficiency over the observed period. The rise in receivables turnover and the concurrent decline in collection days signify the company's improved ability to convert receivables into cash more quickly. Some fluctuations in mid-2024 reflect temporary variations in collection effectiveness, but the trend stabilizes favorably towards the end of the period. This indicates a relatively strong liquidity position related to accounts receivable management throughout the timeline.

Inventory Processing Period

The average inventory processing period exhibits fluctuations throughout the periods analyzed. Initially, there is a general decline from 90 days to a low of 77 days by the third quarter of 2022. This decrease suggests improved efficiency in inventory turnover during this timeframe. However, following this low, the period increases again, peaking at 102 days in the first half of 2025 before showing a slight reduction to 96 days by the last quarter. This pattern indicates some variability in inventory management efficiency, with periods of quicker turnover interrupted by intervals of slower processing.

Receivable Collection Period

The average receivable collection period shows an overall downward trend with intermittent rises. Starting at 41 days, it decreases steadily to a minimum of 27 days by the fourth quarter of 2023, suggesting enhanced effectiveness in collecting receivables. Subsequently, there are modest fluctuations between 28 and 36 days, with no clear directional trend, with the figure settling around 30 days at the end of the period. These fluctuations imply relative stability in credit management with occasional adjustments impacting collection speed.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, mirrors the underlying variability seen in the two components. It begins at 131 days, decreasing to a low of 111 days in the third quarter of 2022, reflecting improved overall operational efficiency during that period. Afterward, the cycle increases again, reaching highs of 134 days in multiple quarters of 2023 and 2025, indicating some lengthening in the time to convert raw materials into cash. The persistence of these peaks suggests episodic challenges in optimizing both inventory turnover and receivables collection simultaneously.

Overall Insights

Across the reviewed periods, the data reveals a pattern of initial improvements in operational efficiency relating to inventory and receivables management, followed by periods marked by slower processing and collection times. The variability in the average inventory processing period contributes significantly to fluctuations in the operating cycle, while the receivables collection period demonstrates a more stable but moderately oscillating trend. These dynamics suggest that while operational improvements have been achieved intermittently, maintaining consistent efficiency remains a challenge. Strategies focused on sustaining inventory turnover rates and stabilizing receivables collections could help reduce the operating cycle length, thereby potentially enhancing cash flow performance.