Starbucks Corporation (SBUX)

The liquidity ratios of Starbucks Corporation indicate a mixed trend over the past five years.

1. Current Ratio:
The current ratio has been declining steadily from 1.06 in 2020 to 0.75 in 2024. A current ratio below 1 suggests that Starbucks may have difficulty meeting its short-term obligations using its current assets alone. This declining trend may indicate potential challenges in managing short-term liquidity in the future.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, has also shown a declining trend from 0.80 in 2020 to 0.52 in 2024. This ratio excludes inventory from current assets, providing a more conservative measure of liquidity. A quick ratio below 1 indicates that Starbucks may have difficulty meeting its short-term obligations without relying on the sale of inventory.

3. Cash Ratio:
The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also decreased from 0.63 in 2020 to 0.39 in 2024. This ratio indicates the company's ability to pay off its immediate obligations with its readily available cash. A decreasing trend in the cash ratio may signify potential cash flow challenges for Starbucks in the upcoming periods.

Overall, the liquidity ratios of Starbucks Corporation have been showing a declining trend over the past five years, raising concerns about the company's ability to meet its short-term obligations and manage liquidity effectively. It may be crucial for Starbucks to closely monitor and address these liquidity challenges to ensure its financial stability and sustainability in the future.

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See also:

Starbucks Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Starbucks Corporation has seen fluctuations over the past five years. In 2024, the company's cash conversion cycle was 17.18 days, which decreased compared to the previous year. This indicates that Starbucks has been able to efficiently convert its inventory into cash within a shorter period.

In 2023, the cash conversion cycle was slightly higher at 19.33 days, showing a slightly less efficient performance compared to 2024. This trend continued from 2022 where the cash conversion cycle was significantly longer at 35.79 days.

However, in 2021, there was an improvement in the cash conversion cycle to 25.28 days, indicating that Starbucks was able to manage its working capital more effectively that year.

The highest cash conversion cycle was observed in 2020 at 40.35 days, suggesting potential inefficiencies in managing inventory, accounts receivable, and accounts payable during that period.

Overall, Starbucks has shown variations in its cash conversion cycle over the years, with efforts towards improving efficiency evident in some periods while facing challenges in others.