PepsiCo Inc (PEP)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.37 | 0.37 | 0.39 | 0.39 | 0.43 |
| Debt-to-capital ratio | 0.67 | 0.67 | 0.68 | 0.69 | 0.75 |
| Debt-to-equity ratio | 2.06 | 2.03 | 2.08 | 2.25 | 3.00 |
| Financial leverage ratio | 5.51 | 5.43 | 5.38 | 5.76 | 6.91 |
PepsiCo Inc's solvency ratios reflect a consistent improvement over the years. The Debt-to-assets ratio decreased from 0.43 in 2020 to 0.37 in 2024, indicating that the company's total debt in relation to its total assets has decreased. Similarly, the Debt-to-capital ratio declined from 0.75 in 2020 to 0.67 in 2024, showing a reduction in the proportion of debt in the company's capital structure.
Moreover, the Debt-to-equity ratio also decreased from 3.00 in 2020 to 2.06 in 2024, suggesting a lower reliance on debt financing relative to equity financing. This improvement indicates a stronger financial position and decreased financial risk for PepsiCo Inc.
The Financial leverage ratio followed a downward trend, decreasing from 6.91 in 2020 to 5.51 in 2024. This demonstrates that PepsiCo Inc's reliance on debt to finance its operations has decreased over the years, which is a positive indicator of the company's ability to meet its financial obligations with the available resources.
Overall, the decreasing trend in PepsiCo Inc's solvency ratios implies a more stable and sustainable capital structure, indicating improved financial health and a stronger ability to withstand economic challenges.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 13.95 | 14.84 | 12.33 | 6.24 | 8.99 |
Interest coverage is a crucial financial ratio that indicates a company's ability to meet its interest payment obligations with its operating income. Looking at PepsiCo Inc's interest coverage over the years, we observe fluctuations in this ratio:
1. As of December 31, 2020, PepsiCo's interest coverage was 8.99, indicating that the company earned operating income nearly 9 times its interest expense. This implies that the company had a comfortable buffer to cover its interest payments.
2. By the end of December 31, 2021, the interest coverage ratio decreased to 6.24. This could signal a moderate decline in PepsiCo's ability to cover its interest expenses with operating income compared to the previous year.
3. However, in the subsequent years, there was an improvement in PepsiCo's interest coverage ratio. By December 31, 2022, the ratio increased to 12.33, signifying a robust ability to meet interest obligations.
4. The trend continued positively in the following years, with the interest coverage ratio reaching 14.84 by December 31, 2023, and 13.95 by December 31, 2024. These figures indicate a strengthening financial position for PepsiCo, with a healthy capacity to comfortably service its interest payments.
In summary, while there were fluctuations in PepsiCo's interest coverage ratio over the years, the overall trend shows a recovery and improvement in the company's ability to cover its interest obligations with operating income, reflecting a positive financial performance.