Starbucks Corporation (SBUX)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Inventory turnover	7.57	7.23	5.56	6.76	6.30
Receivables turnover	29.80	30.38	26.80	30.25	18.53
Payables turnover	8.44	8.46	8.39	8.95	9.80
Working capital turnover	—	—	—	18.11	51.17

The activity ratios for Starbucks Corporation reflect its efficiency in managing various components of its operations.

1. Inventory turnover: This ratio indicates how effectively the company is managing its inventory by showing how many times inventory is sold and replaced during a specific period. Starbucks' inventory turnover has been consistently improving over the past five years, indicating efficient inventory management.

2. Receivables turnover: This ratio demonstrates how efficiently Starbucks is collecting its accounts receivable. The company has maintained a high receivables turnover rate, suggesting prompt collection of receivables and efficient credit management.

3. Payables turnover: This ratio measures how quickly Starbucks pays its suppliers. The company's payables turnover has been relatively stable, suggesting consistent payment practices and effective management of trade payables.

4. Working capital turnover: This ratio, which is not available for the most recent years, measures how effectively Starbucks utilizes its working capital to generate sales revenue. The significant decrease in this ratio over the years could indicate a change in the company's operating efficiency or possibly a shift in its business model.

Overall, Starbucks Corporation demonstrates strong efficiency in managing its inventory, receivables, and payables, as evidenced by its consistent turnover ratios. It is important for the company to continue monitoring and improving these ratios to maintain its operational efficiency and financial stability.

Average number of days

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	48.19	50.46	65.66	54.01	57.90
Days of sales outstanding (DSO)	days	12.25	12.01	13.62	12.07	19.69
Number of days of payables	days	43.26	43.14	43.48	40.80	37.24

To analyze Starbucks Corporation's activity ratios based on the given data, we will focus on three key ratios: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- The trend in DOH over the past five years shows some fluctuations. In 2020, Starbucks held inventory for an average of 57.90 days, which decreased to 54.01 days in 2021, increased to 65.66 days in 2022, and then decreased to 50.46 days in 2023 before further dropping to 48.19 days in 2024.
- A lower DOH indicates that Starbucks is selling its inventory quickly, which is generally positive as it reduces holding costs and the risk of inventory obsolescence.

2. Days of Sales Outstanding (DSO):
- The trend in DSO shows relatively consistent performance over the years, with a slight fluctuation. DSO decreased from 19.69 days in 2020 to 12.07 days in 2021, increased to 13.62 days in 2022, and then slightly decreased again to 12.01 days in 2023 and further to 12.25 days in 2024.
- A lower DSO indicates that Starbucks is collecting its accounts receivable more efficiently, which implies a strong credit policy and effective management of customer credit.

3. Number of Days of Payables:
- Starbucks' payment practices to suppliers, as indicated by the Number of Days of Payables, have shown a slight increasing trend over the five years. The days of payables increased from 37.24 days in 2020 to 40.80 days in 2021, then to 43.48 days in 2022 and finally to 43.26 days in 2024.
- An increasing trend in the days of payables may suggest that Starbucks is taking longer to pay its suppliers, potentially improving its working capital management by utilizing supplier financing effectively.

In conclusion, Starbucks Corporation has shown efficiency in managing its inventory and accounts receivable over the years, although there have been fluctuations in inventory holding periods. The trend in the number of days of payables indicates a gradual increase in payment periods to suppliers, potentially reflecting effective working capital management strategies.

Long-term

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Fixed asset turnover	4.17	4.87	4.92	4.56	3.77
Total asset turnover	1.15	1.22	1.15	0.93	0.80

The long-term activity ratios of Starbucks Corporation indicate the company's efficiency in utilizing its fixed assets and total assets to generate sales over the past five years.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio has shown a decreasing trend from 2020 to 2024, with values ranging from 3.77 to 4.92.
- This ratio reveals that Starbucks generated $4.17 to $4.92 in sales for every dollar invested in fixed assets during the respective years.
- A higher fixed asset turnover ratio indicates better efficiency in utilizing fixed assets to generate revenue, which generally reflects positively on the company's operational performance.

2. Total Asset Turnover:
- The total asset turnover ratio has fluctuated over the years, ranging from 0.80 to 1.22, with the highest value recorded in 2023.
- This ratio signifies that Starbucks generated sales equivalent to 0.80 to 1.22 times its total assets during the respective years.
- A higher total asset turnover ratio implies more efficient use of all assets (both fixed and current) to generate revenue, indicating effective management of resources and operational activities.

Overall, the analysis of the long-term activity ratios suggests that Starbucks Corporation has been relatively efficient in utilizing both fixed and total assets to drive sales growth over the past five years, with fluctuations observed in the total asset turnover ratio. The company's ability to maintain a healthy balance between fixed assets and total assets turnover signifies operational effectiveness and prudent resource management strategies.