PepsiCo Inc (PEP)

Cash conversion cycle

		Dec 31, 2024	Sep 7, 2024	Jun 15, 2024	Mar 23, 2024	Dec 31, 2023	Sep 9, 2023	Jun 17, 2023	Mar 31, 2023	Dec 31, 2022	Sep 3, 2022	Jun 11, 2022	Mar 19, 2022	Dec 31, 2021	Sep 4, 2021	Jun 12, 2021	Mar 20, 2021	Dec 31, 2020	Sep 5, 2020	Jun 13, 2020	Mar 21, 2020
Days of inventory on hand (DOH)	days	46.39	49.45	51.24	48.24	46.49	48.07	52.08	50.56	46.97	46.63	50.29	45.94	42.80	45.03	53.53	51.42	47.89	49.13	52.04	45.54
Days of sales outstanding (DSO)	days	41.06	48.00	47.35	43.45	43.16	46.94	46.39	43.40	42.94	—	—	—	39.86	—	—	—	43.59	—	—	—
Number of days of payables	days	96.16	—	—	—	101.40	—	—	—	96.54	—	—	—	96.81	—	—	—	101.62	—	—	—
Cash conversion cycle	days	-8.70	97.45	98.59	91.69	-11.76	95.01	98.47	93.96	-6.63	46.63	50.29	45.94	-14.15	45.03	53.53	51.42	-10.14	49.13	52.04	45.54

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 46.39 + 41.06 – 96.16
= -8.70

The cash conversion cycle for PepsiCo Inc has shown fluctuations over the years based on the provided data. The cash conversion cycle essentially measures how long it takes for a company to convert its investments in inventory into cash flows from sales.

From March 2020 to June 2022, the cash conversion cycle ranged from approximately 45 to 53 days, indicating a relatively stable cycle for the company. However, there were some anomalies seen in December 2020 and December 2021, with negative values of -10.14 and -14.15 days respectively. This suggests that during these periods, PepsiCo was able to convert its inventory into cash at a quicker pace than usual.

In the subsequent years, the cash conversion cycle increased significantly, reaching around 98 days by June 2024, indicating a longer period for converting inventory to cash. The negative values seen in December 2022 and December 2023 imply again that there were periods of accelerated conversion of inventory to cash.

Overall, the trend in PepsiCo's cash conversion cycle shows variability, with instances of improved efficiency in cash conversion and periods of prolonged conversion cycles. It would be essential for the company to manage its inventory and accounts receivable effectively to optimize its cash conversion cycle and enhance its overall liquidity position.