Coca-Cola Co. (NYSE:KO)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, the initial period (April 2022 – December 2022) demonstrates relatively stable performance, followed by fluctuations and, in some cases, notable shifts in subsequent quarters. A closer examination of individual ratios reveals specific patterns.

Inventory Turnover

Inventory turnover generally decreased from a high of 4.74 in September 2022 to a low of 3.57 in March 2025. While there were some quarterly increases, the overall trend is downward, suggesting a potential slowdown in the rate at which inventory is sold. A slight recovery to 4.16 is observed in June 2025.

Receivables Turnover

Receivables turnover shows a generally increasing trend from 8.65 in April 2022 to a peak of 15.78 in December 2025. This indicates an improved efficiency in collecting receivables. The increase is not linear, with some quarterly variations, but the overall direction is positive. Prior to the final period, the ratio fluctuated between approximately 9.46 and 13.42.

Working Capital Turnover

Working capital turnover demonstrates significant volatility. It initially fluctuates between 11.91 and 15.83 before experiencing substantial increases in later periods, peaking at 62.92 in December 2024. This is followed by a sharp decline to 4.91 in December 2025. These large swings suggest considerable changes in the relationship between revenue and working capital, potentially linked to strategic shifts or external factors. The ratio was relatively stable between 12.35 and 15.83 in the earlier periods.

Average Inventory Processing Period

The average inventory processing period generally increased from 86 days in April 2022 to 102 days in March 2025, mirroring the decline in inventory turnover. A decrease to 88 days is observed in December 2025, aligning with the slight increase in inventory turnover. This indicates that, on average, inventory is held for a longer period, potentially due to slower sales or increased inventory levels.

Average Receivable Collection Period

The average receivable collection period consistently decreased from 42 days in April 2022 to 23 days in December 2025. This decrease corresponds with the increase in receivables turnover, indicating a faster collection of receivables. The reduction is relatively steady, suggesting consistent improvements in collection efficiency.

Operating Cycle

The operating cycle initially decreased from 128 days in April 2022 to 111 days in September 2022, then increased to 134 days in March 2024. It subsequently decreased to 111 days in December 2025. The fluctuations in the operating cycle reflect the combined effects of changes in both the average inventory processing period and the average receivable collection period. The cycle appears to be stabilizing towards the end of the observed period.

In summary, the analysis reveals a trend of decreasing inventory turnover and increasing inventory processing time, alongside improving receivables turnover and decreasing collection periods. The working capital turnover exhibits significant volatility, requiring further investigation to understand the underlying drivers. These shifts suggest evolving operational dynamics and potentially changing strategies regarding inventory management and credit policies.

Inventory turnover exhibited fluctuations over the observed period, generally trending downwards before a recent increase. Initial values indicated a relatively stable turnover, followed by a period of decline, and then a partial recovery towards the end of the analyzed timeframe.

Overall Trend

The inventory turnover ratio began at 4.26 and generally decreased through the first half of 2023, reaching a low of 3.57. A subsequent upward trend commenced in late 2023 and continued into the first half of 2025, culminating in a ratio of 4.16. This suggests potential improvements in inventory management efficiency in the latter part of the period.

Short-Term Fluctuations

A slight increase in inventory turnover was observed from April 1, 2022 (4.26) to July 1, 2022 (4.69), followed by a further increase to September 30, 2022 (4.74). A decrease was then noted in December 31, 2022 (4.25). The subsequent quarters of 2023 showed a continued decline, with the lowest point at March 31, 2023 (3.86) and June 30, 2023 (3.94). A modest recovery occurred in the latter half of 2023, and this positive momentum continued through the first half of 2025.

Inventory and Cost of Goods Sold Relationship

Cost of goods sold remained relatively stable, fluctuating between approximately US$4,500 million and US$4,900 million throughout the period. However, inventories demonstrated more volatility, increasing from US$3,741 million in April 2022 to US$4,727 million in March 2023, before decreasing to US$4,425 million by December 2025. The interplay between these two figures directly influences the inventory turnover ratio, explaining the observed trends.

Recent Performance

The most recent quarters show a strengthening of inventory turnover. The ratio increased from 3.81 in September 2025 to 4.16 in December 2025, indicating a potentially more efficient use of inventory and improved sales velocity. This recent improvement warrants further investigation to determine its sustainability.

The observed fluctuations in inventory turnover suggest a dynamic relationship between sales, production, and inventory management practices. Continued monitoring of this ratio is recommended to assess the effectiveness of inventory control strategies.

The receivables turnover ratio exhibits considerable fluctuation over the observed period, spanning from April 2022 to December 2025. An initial increase is noted, followed by periods of both growth and decline, culminating in a substantial rise towards the end of the analyzed timeframe.

Overall Trend

The ratio generally trends upward over the entire period, despite interim volatility. The beginning of the period shows a ratio around 8.65, and it concludes at 15.78, indicating an improved efficiency in collecting receivables.

Initial Increase (Apr 1, 2022 – Dec 31, 2022)

From April 2022 to December 2022, the receivables turnover ratio demonstrates a consistent upward trajectory, increasing from 8.65 to 12.33. This suggests a strengthening in the company’s ability to convert receivables into cash during this period. The most significant increase occurred between September 30, 2022 (10.60) and December 31, 2022 (12.33).

Subsequent Fluctuations (Mar 31, 2023 – Sep 27, 2024)

Following the peak in December 2022, the ratio experiences a period of fluctuation. It declines to 9.46 by March 31, 2023, then rises again to 13.42 by December 31, 2023. This is followed by a decrease to 10.22 in June 2024, before increasing to 10.95 by September 2024. This period indicates a less consistent collection efficiency compared to the prior nine months.

Final Increase (Dec 31, 2024 – Dec 31, 2025)

The final portion of the period shows a marked increase in the receivables turnover ratio. From 13.19 in December 2024, the ratio rises significantly to 15.78 by December 2025. This represents the highest value observed throughout the entire analyzed timeframe and suggests a substantial improvement in the speed of receivables collection in the final year.

The observed fluctuations may be attributable to changes in credit policies, seasonal sales patterns, or broader economic conditions. The substantial increase in the final period warrants further investigation to determine the underlying drivers and assess the sustainability of this improved performance.

The working capital turnover ratio exhibits considerable fluctuation throughout the observed period, spanning from April 2022 to December 2025. Initial values demonstrate a generally increasing trend, followed by a period of volatility and a subsequent decline.

Initial Increasing Trend (Apr 1, 2022 – Jul 1, 2022)

The ratio increased from 11.91 to 15.83, indicating a more efficient utilization of working capital to generate revenue during this timeframe. This suggests improved management of current assets and liabilities.

Period of Stability and Slight Increase (Jul 1, 2022 – Sep 29, 2023)

Following the initial increase, the ratio remained relatively stable, fluctuating between 13.02 and 15.83. This suggests a consistent level of operational efficiency in managing working capital. A slight upward trend is observable through September 2023.

Significant Volatility (Dec 31, 2023 – Jun 27, 2025)

A marked increase to 62.92 is observed in December 2023, followed by a substantial decline to 4.91 by December 2025. This period is characterized by significant swings in the ratio. The ratio peaked at 62.92, indicating a very rapid turnover of working capital, potentially due to a significant reduction in working capital relative to revenue. The subsequent decline suggests a slower turnover, potentially due to increased investment in working capital or a decrease in revenue.

Working Capital and Net Operating Revenues Relationship

The fluctuations in the working capital turnover ratio appear to be driven by more substantial changes in working capital than in net operating revenues. While net operating revenues remain relatively consistent, the working capital figures demonstrate greater variability, particularly in the later periods. This suggests that changes in working capital management are the primary driver of the observed ratio fluctuations.

Recent Trend (Sep 26, 2025 – Dec 31, 2025)

The ratio decreased from 10.04 to 4.91, indicating a significant slowdown in the rate at which working capital is being used to generate sales. This could be due to a build-up of inventory, slower collection of receivables, or increased payables.

Overall, the working capital turnover ratio demonstrates a complex pattern. While initial periods show improvement and stability, the latter portion of the observed period is marked by substantial volatility and a declining trend, warranting further investigation into the underlying causes of these fluctuations.

The average inventory processing period exhibited fluctuations over the observed timeframe. Initially, a decreasing trend was noted, followed by periods of relative stability and subsequent increases. A detailed examination reveals specific patterns in the metric’s behavior.

Initial Decreasing Trend (Apr 1, 2022 – Jul 1, 2022)

The average inventory processing period decreased from 86 days on April 1, 2022, to 78 days on July 1, 2022. This suggests an improvement in inventory management efficiency during this period, potentially due to increased sales velocity or optimized supply chain operations.

Period of Stability (Jul 1, 2022 – Sep 30, 2022)

Following the initial decrease, the period remained relatively stable, fluctuating between 77 and 78 days for the subsequent two quarters. This indicates a sustained level of inventory efficiency.

Return to Initial Level (Dec 31, 2022)

The average inventory processing period increased to 86 days by December 31, 2022, returning to the level observed at the beginning of the analyzed period. This could be attributed to seasonal factors, increased inventory levels in anticipation of peak demand, or potential disruptions in the supply chain.

Increasing Trend (Mar 31, 2023 – Mar 28, 2025)

From March 31, 2023, through March 28, 2025, a general upward trend in the average inventory processing period is observed. The period increased from 95 days to 102 days, peaking in the first quarter of 2025. This suggests a potential slowdown in inventory turnover or an increase in inventory holdings.

Recent Decrease (Jun 27, 2025 – Dec 31, 2025)

The most recent data indicates a decrease in the average inventory processing period, falling from 96 days on September 26, 2025, to 88 days on December 31, 2025. This suggests a recent improvement in inventory management, potentially driven by promotional activities or a more efficient supply chain.

Overall, the average inventory processing period demonstrates cyclical behavior with periods of improvement, stability, and increases. The recent decrease provides a positive signal, but continued monitoring is recommended to assess the sustainability of this trend.

The average receivable collection period demonstrates a generally decreasing trend over the observed timeframe, with some fluctuations. Initially, the period stood at 42 days before exhibiting a consistent decline to a low of 23 days. Subsequent periods show some increase, but remain below the initial value.

Overall Trend

A noticeable downward trend in the average receivable collection period is apparent from April 1, 2022, through December 31, 2025. The period decreased from 42 days to 23 days, indicating an improvement in the efficiency of collecting receivables.

Short-Term Fluctuations

While the overall trend is downward, there are short-term increases. For example, the period increased from 27 days on September 29, 2023, to 36 days on March 29, 2024. These fluctuations suggest potential seasonality or temporary changes in collection practices or customer payment behavior.

Recent Performance

The most recent periods show a slight increase from 28 days on December 31, 2024, to 30 days on September 26, 2025, and then to 32 days on March 28, 2025. This suggests a potential stabilization or a minor lengthening of the collection cycle, though it remains significantly lower than the period observed at the beginning of the analyzed timeframe.

Comparison to Initial Period

The average receivable collection period at the end of the period (23 days) is substantially lower than the period at the beginning (42 days). This represents a significant improvement in the speed at which receivables are converted into cash.

The observed changes in the average receivable collection period suggest effective management of credit and collection policies, potentially leading to improved cash flow. Continued monitoring is recommended to understand the drivers behind the recent fluctuations and ensure sustained efficiency in receivables management.

The operating cycle exhibits fluctuations over the observed period, spanning from April 1, 2022, to December 31, 2025. Generally, the operating cycle demonstrates a tendency to lengthen during the first half of each year and contract during the latter half, though this pattern is not consistently maintained.

Average Inventory Processing Period

The average inventory processing period generally remained within a range of 77 to 98 days. An initial decrease from 86 days in April 2022 to 77 days in September 2022 is observed, followed by an increase to 86 days by December 2022. The period then increased to a peak of 102 days in both March and June of 2025, before decreasing to 96 days in September 2025 and 88 days in December 2025. This suggests potential seasonality or changes in inventory management practices impacting the time required to convert inventory into sales.

Average Receivable Collection Period

The average receivable collection period showed a more pronounced downward trend overall. Starting at 42 days in April 2022, it decreased to a low of 27 days by December 2022. Fluctuations occurred in subsequent periods, with the period increasing to 36 days in June 2024, but ultimately decreasing to 23 days by December 2025. This indicates improving efficiency in collecting receivables, potentially due to stricter credit policies or more effective collection efforts.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, varied between 111 and 134 days. A decrease from 128 days in April 2022 to 111 days in September 2022 was followed by an increase to 134 days in March 2023. The cycle then generally trended downwards, reaching a low of 111 days in December 2025. The fluctuations in the operating cycle largely mirror the combined trends of its component periods, with the decreasing receivable collection period partially offsetting increases in the inventory processing period. The peak operating cycle of 134 days occurred twice, in March 2023 and March 2025, coinciding with peaks in the inventory processing period.

In summary, while the inventory processing period demonstrates some variability, the receivable collection period shows a clear improvement over the analyzed timeframe. The operating cycle reflects these combined movements, exhibiting a general tendency towards contraction, though with notable quarterly fluctuations.