Starbucks Corporation (SBUX)
Interest coverage
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 5,951,800 | 4,713,000 | 5,825,700 | 1,605,000 | 4,801,800 |
| Interest expense | US$ in thousands | 550,100 | 482,900 | 469,800 | 437,000 | 331,000 |
| Interest coverage | 10.82 | 9.76 | 12.40 | 3.67 | 14.51 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,951,800K ÷ $550,100K
= 10.82
The interest coverage ratio of Starbucks Corporation has shown varying trends over the past five years. The ratio measures the company's ability to pay interest expenses on its debt with its operating income.
In 2023, Starbucks' interest coverage ratio stood at 10.82, indicating that the company generated operating income 10.82 times greater than its interest expenses for the year. This suggests a strong ability to cover its interest obligations.
Comparing this to the previous years, we observe fluctuations in the ratio. In 2022 and 2021, the interest coverage ratios were 9.76 and 12.40, respectively, indicating a moderate ability to cover interest expenses. The significant decrease to 3.67 in 2020 may raise concerns as the company's ability to cover interest expenses reduced substantially. However, the ratio improved to 14.51 in 2019, showing a very strong ability to cover interest expenses that year.
Overall, while there have been fluctuations in Starbucks Corporation's interest coverage ratio over the past five years, the ratio has generally remained at healthy levels, with 2023 showing a solid ability to cover interest expenses. It is essential for the company to further monitor and manage its debt levels and operating performance to ensure continued financial stability.
Peer comparison
Sep 30, 2023