PepsiCo Inc (PEP)

Cash conversion cycle

		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	Dec 31, 2019	Sep 7, 2019	Mar 23, 2019	Dec 31, 2018
Days of inventory on hand (DOH)	days	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	38.48	44.85	44.10	38.86
Days of sales outstanding (DSO)	days	43.16	46.94	46.39	43.40	42.94	—	—	—	39.86	—	—	—	43.59	—	—	—	—	—	—	—
Number of days of payables	days	101.40	—	—	—	96.54	—	—	—	96.81	—	—	—	101.62	—	—	—	92.37	—	—	89.61
Cash conversion cycle	days	-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	-53.89	44.85	44.10	-50.75

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 few quarters. During the most recent quarter, as of December 31, 2023, the company's cash conversion cycle was negative at -11.76 days, indicating that PepsiCo Inc's operating cycle was short enough to generate cash more quickly than it needed to pay its suppliers and vendors.

However, in the preceding quarters, the cash conversion cycle was positive, indicating that PepsiCo Inc took longer to convert its investments in inventory and receivables into cash. Notably, the cycle peaked in June 17, 2023, at 98.47 days, signifying a longer period to convert its resources into cash.

Overall, a negative cash conversion cycle signifies that a company is efficiently managing its working capital and operating cycle, while a positive cycle may suggest inefficiencies in managing inventories, receivables, and payables. Monitoring the trend in the cash conversion cycle over time can help evaluate the company's operational efficiency and liquidity management.