Starbucks Corporation (SBUX)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Inventory turnover	7.23	5.56	6.76	6.30	7.92
Receivables turnover	30.38	26.80	30.25	18.53	25.11
Payables turnover	8.46	8.39	8.95	9.80	10.18
Working capital turnover	—	—	18.11	51.17	—

1. Inventory Turnover:
- Starbucks' inventory turnover has been relatively stable over the past five years, ranging from 5.56 to 7.92 times.
- The increase in inventory turnover from 2022 to 2023 indicates that Starbucks is managing its inventory more efficiently, translating inventory into sales at a faster pace.

2. Receivables Turnover:
- The receivables turnover ratio has also shown a positive trend over the years, increasing consistently from 2019 to 2023.
- Starbucks has been collecting its receivables at a faster rate, which is a positive sign of effective credit management and customer payments.

3. Payables Turnover:
- Starbucks' payables turnover has been relatively stable around 8-10 times over the past five years.
- This indicates that Starbucks is efficiently managing its payments to suppliers, maintaining consistent relationships throughout the years.

4. Working Capital Turnover:
- The working capital turnover ratio was not provided for 2020 and 2021 but decreased significantly in 2022 and was not available for 2023.
- A higher working capital turnover ratio indicates that Starbucks is effectively utilizing its working capital to generate sales. The decreasing trend could imply either improved efficiency in capital utilization or a change in business operations.

Overall, the activity ratios of Starbucks Corporation show a generally positive trend in terms of inventory management, receivables collection, and payables management. The company seems to be operating efficiently in these aspects, contributing to its financial performance.

Average number of days

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Days of inventory on hand (DOH)	days	50.46	65.66	54.01	57.90	46.10
Days of sales outstanding (DSO)	days	12.01	13.62	12.07	19.69	14.54
Number of days of payables	days	43.14	43.48	40.80	37.24	35.86

The Days of Inventory on Hand (DOH) ratio for Starbucks Corporation has shown some fluctuations over the past five years. In the most recent fiscal year ending September 30, 2023, the company held inventory for approximately 50.46 days, which is a decrease from the previous year. This suggests that Starbucks has been more efficient in managing its inventory levels and turning inventory into sales.

The Days of Sales Outstanding (DSO) ratio reflects how quickly Starbucks collects its accounts receivable. In the latest fiscal year, Starbucks collected its sales within 12.01 days, which improved from the prior year. A lower DSO indicates that the company is collecting payments from customers more swiftly, which is a positive sign for cash flow management.

On the other hand, the number of Days of Payables indicates how quickly Starbucks pays its suppliers. The data reveals that the company takes around 43.14 days to settle its payables, which has remained relatively stable over the past five years. An increase in the Days of Payables ratio may suggest that Starbucks is taking longer to pay its suppliers, potentially indicating stretched liquidity or improved negotiation terms.

Overall, based on the activity ratios analysis, Starbucks Corporation has shown improvements in managing its inventory and collecting sales efficiently, while also maintaining stability in its payment cycle with suppliers.

Long-term

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Fixed asset turnover	4.87	4.92	4.56	3.77	4.12
Total asset turnover	1.22	1.15	0.93	0.80	1.38

Starbucks Corporation's long-term activity ratios provide insights into how efficiently the company is utilizing its assets to generate sales over the years.

The fixed asset turnover ratio measures the company's ability to generate revenue from its fixed assets. The decreasing trend in fixed asset turnover from 2019 to 2020, followed by an increase in subsequent years, indicates fluctuations in the efficiency of utilizing fixed assets. The ratio peaked at 4.92 in 2022, signaling that for each dollar invested in fixed assets, the company generated $4.92 in sales, reflecting strong asset utilization efficiency. The slight decrease to 4.87 in 2023 may suggest a minor decline in efficiency in the most recent period.

Meanwhile, the total asset turnover ratio reflects how well Starbucks is using all its assets to generate sales. The company's total asset turnover ratio has been steadily increasing over the years, from 0.80 in 2020 to 1.22 in 2023. This indicates that for every dollar of assets held, Starbucks generated $1.22 in sales in 2023. The rising trend in total asset turnover signifies an improvement in overall asset efficiency in generating sales, which is a positive indicator of the company's operational performance.

In conclusion, Starbucks Corporation has shown varying efficiency levels in utilizing its assets to generate sales, with improvements in overall asset efficiency indicated by the increasing total asset turnover ratio, despite minor fluctuations seen in the fixed asset turnover ratio.