PepsiCo Inc (PEP)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.85 | 0.80 | 0.83 | 0.98 | 0.86 |
| Quick ratio | 0.66 | 0.58 | 0.56 | 0.77 | 0.66 |
| Cash ratio | 0.32 | 0.20 | 0.23 | 0.41 | 0.28 |
PepsiCo Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.
The current ratio has been fluctuating over the past five years, indicating the company's ability to cover its short-term liabilities with its current assets. The current ratio decreased from 0.98 in 2020 to 0.85 in 2023, which may suggest a potential decline in liquidity risk management.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also declined from 0.77 in 2020 to 0.66 in 2023. This implies that PepsiCo's ability to cover its immediate liabilities with its most liquid assets has weakened over the years.
The cash ratio, which focuses solely on the company's cash and cash equivalents relative to its current liabilities, has also shown a decreasing trend from 0.41 in 2020 to 0.32 in 2023. This may indicate a potential reduction in the company's ability to cover its short-term obligations solely with its cash reserves.
Overall, the downward trend in all three liquidity ratios suggests that PepsiCo Inc's liquidity position may have weakened over the past five years. It is important for investors and stakeholders to monitor these ratios closely to assess the company's ability to handle its short-term financial commitments effectively.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -11.76 | -6.63 | -14.15 | -10.14 | -14.12 |
The cash conversion cycle of PepsiCo Inc has shown fluctuation over the past five years. On Dec 31, 2023, the cash conversion cycle was -11.76 days, indicating that PepsiCo was able to convert its inventory and receivables into cash more quickly compared to previous years. This improvement suggests a more efficient operation in managing its working capital.
In the preceding year, on Dec 31, 2022, the cash conversion cycle was -6.63 days, showing a further enhancement in the company's ability to convert its resources into cash. However, on Dec 31, 2021, the cycle was -14.15 days, implying a longer period required for PepsiCo to convert its inventory and receivables into cash compared to the following years.
Similarly, on Dec 31, 2020, the cash conversion cycle was -10.14 days, indicating a shorter period compared to the cycle on Dec 31, 2021. The trend continued in Dec 31, 2019, when the cycle was -14.12 days, again displaying efficiency in converting working capital into cash.
Overall, despite fluctuations, the negative values of the cash conversion cycle over the years suggest that PepsiCo Inc has been effective in managing its working capital to generate cash flow efficiently.