PepsiCo Inc (PEP)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 7.85 | 7.77 | 8.53 | 7.62 | 9.03 |
| Receivables turnover | 8.46 | 8.50 | 9.16 | 8.37 | 8.59 |
| Payables turnover | 3.60 | 3.78 | 3.77 | 3.59 | 3.76 |
| Working capital turnover | — | — | — | — | — |
The analysis of PepsiCo Inc's activity ratios reveals the following trends:
1. Inventory Turnover:
- PepsiCo's inventory turnover has been relatively stable over the past five years, ranging from 7.62 to 9.03 times. This indicates that the company efficiently manages its inventory by quickly selling and replenishing goods.
- The slight fluctuations in inventory turnover suggest that PepsiCo has effectively adjusted its inventory levels to meet changing demand dynamics.
2. Receivables Turnover:
- The receivables turnover ratio has also shown consistency, ranging from 8.37 to 9.16 times over the five-year period. This signifies that PepsiCo effectively collects payment from its customers and manages its accounts receivable efficiently.
- The consistent performance in receivables turnover indicates that PepsiCo has maintained a strong credit and collection process.
3. Payables Turnover:
- PepsiCo's payables turnover ratio has been relatively stable, fluctuating between 3.59 and 3.78 times over the five-year period. This suggests that the company effectively manages its payables by efficiently settling its outstanding liabilities.
- The consistency in payables turnover implies that PepsiCo has maintained good relationships with its suppliers and manages its payment terms effectively.
4. Working Capital Turnover:
- The data for working capital turnover is not available for analysis, possibly due to missing data or a change in reporting practices by the company.
- Without the working capital turnover ratio, it is challenging to assess how efficiently PepsiCo utilizes its working capital to generate sales.
In summary, PepsiCo's inventory turnover, receivables turnover, and payables turnover ratios demonstrate consistent and effective management of its operating cycle, inventory, receivables, and payables. These ratios reflect the company's ability to efficiently convert its assets into revenue and manage its cash flow effectively.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 46.49 | 46.97 | 42.80 | 47.89 | 40.43 |
| Days of sales outstanding (DSO) | days | 43.16 | 42.94 | 39.86 | 43.59 | 42.51 |
| Number of days of payables | days | 101.40 | 96.54 | 96.81 | 101.62 | 97.06 |
Days of Inventory on Hand (DOH):
PepsiCo's DOH has been relatively stable over the past five years, ranging from 40.43 days in 2019 to 47.89 days in 2020. In 2023, the DOH decreased slightly to 46.49 days. This indicates that PepsiCo manages its inventory efficiently by maintaining a reasonable level of inventory relative to its sales volume.
Days of Sales Outstanding (DSO):
PepsiCo's DSO has shown a consistent pattern of around 40-44 days over the past five years, with a slight increase to 43.16 days in 2023. This implies that the company takes approximately 43 days to collect its accounts receivable, which is considered a reasonable period in the industry.
Number of Days of Payables:
PepsiCo's number of days of payables has been relatively steady, ranging from 96.54 days in 2022 to 101.62 days in 2020. In 2023, the number of days of payables increased to 101.40 days. A higher number of days of payables indicates that PepsiCo takes more time to pay its suppliers, which may positively impact cash flow and working capital management.
Overall, analyzing these activity ratios together suggests that PepsiCo has been effectively managing its inventory, accounts receivable, and accounts payable over the past five years. However, potential changes in these ratios should be monitored to ensure ongoing efficiency in the company's operations.
See also:
PepsiCo Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.38 | 3.56 | 3.55 | 3.29 | 3.48 |
| Total asset turnover | 0.91 | 0.94 | 0.86 | 0.76 | 0.86 |
Long-term activity ratios provide insight into how efficiently PepsiCo Inc is utilizing its assets to generate sales. The fixed asset turnover ratio indicates that for every dollar invested in fixed assets, PepsiCo generated $3.38 of sales in 2023. This ratio has fluctuated over the past five years but generally remained above 3, indicating consistent operational efficiency in utilizing its long-term assets.
The total asset turnover ratio, on the other hand, reveals that for every dollar of total assets, PepsiCo generated $0.91 of sales in 2023. This ratio has also varied over the years but shows an improvement in 2023 compared to 2022, indicating better overall asset utilization in generating revenue.
Overall, both ratios suggest that PepsiCo has been effectively managing its long-term assets to drive revenue growth. The increase in total asset turnover from 2022 to 2023 is a positive sign of improved efficiency in utilizing all assets, while the stable trend in fixed asset turnover indicates consistent performance in generating sales from long-term investments.