Starbucks Corporation (SBUX)

Liquidity ratios

Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020 Sep 30, 2019
Current ratio 0.78 0.77 1.20 1.06 0.92
Quick ratio 0.55 0.48 0.93 0.80 0.62
Cash ratio 0.42 0.35 0.81 0.63 0.45

Based on the liquidity ratios of Starbucks Corporation over the past five years, the company's ability to meet its short-term financial obligations has shown some variation.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated between 0.77 and 1.20. A current ratio below 1 indicates that Starbucks may have difficulty meeting its current obligations with its current assets alone. The downward trend in the current ratio over the last two years suggests that the company may be facing challenges in managing its short-term liquidity.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. This ratio has ranged from 0.48 to 0.93 over the five-year period. A quick ratio below 1 indicates that Starbucks may struggle to meet its short-term obligations without relying on inventory. The fluctuation in the quick ratio highlights potential fluctuations in the company's ability to quickly convert assets into cash to meet immediate liabilities.

The cash ratio, which is the most conservative measure of liquidity, focuses solely on cash and cash equivalents to cover current liabilities. Starbucks' cash ratio has varied between 0.35 and 0.81. A cash ratio below 1 suggests that Starbucks may not have enough cash on hand to cover its short-term obligations. The downward trend in the cash ratio over the last three years raises concerns about the company's ability to maintain adequate cash reserves for unexpected expenses or downturns in the business environment.

Overall, the liquidity ratios indicate that Starbucks Corporation may need to focus on improving its short-term liquidity position to ensure financial stability and meet its ongoing obligations. Further analysis of the company's cash management practices and working capital efficiency may be necessary to address these concerns and enhance overall liquidity management.


See also:

Starbucks Corporation Liquidity Ratios


Additional liquidity measure

Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020 Sep 30, 2019
Cash conversion cycle days 19.33 35.79 25.28 40.35 24.78

The cash conversion cycle of Starbucks Corporation has shown varying trends over the past five years. In 2023, the company's cash conversion cycle decreased significantly to 19.33 days from the previous year's 35.79 days, indicating an improvement in its efficiency in managing cash flows.

Compared to 2021, where the cash conversion cycle was 25.28 days, this suggests that Starbucks has been more effective in converting its investments in inventory and receivables into cash in 2023.

However, when looking at the historical data, the cash conversion cycle was higher in 2020 at 40.35 days and 2019 at 24.78 days. This indicates that Starbucks was more efficient in managing its working capital in 2019 compared to 2020, with a decrease in days required to convert cash invested in operations back to cash.

Overall, the decreasing trend in the cash conversion cycle from 2020 to 2023 indicates that Starbucks has been more adept in managing its working capital and improving its operational efficiency in recent years.