PepsiCo Inc (PEP)

Cash conversion cycle

		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
Cash conversion cycle	days	-11.76	-6.63	-14.15	-10.14	-14.12

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 46.49 + 43.16 – 101.40
= -11.76

The cash conversion cycle for PepsiCo Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle was -11.76 days, indicating that PepsiCo took approximately 11.76 days to convert its investments in raw materials and other resources into cash from sales and then back into cash from accounts receivable. This represents an improvement from the previous year (2022) where the cash conversion cycle was -6.63 days.

In 2021, the company experienced a longer cash conversion cycle of -14.15 days, which is a measure of efficiency in managing working capital. However, there was a decrease in the cash conversion cycle in 2020 compared to 2021, with the cycle standing at -10.14 days.

Overall, PepsiCo has shown a consistent ability to efficiently manage its working capital and convert investments into cash. The negative values of the cash conversion cycle indicate that the company is able to generate cash inflows from its operational activities faster than the outflows related to inventory and accounts receivable. This efficient management of working capital is essential for maintaining liquidity and financial health in the long run.