Starbucks Corp. (NASDAQ:SBUX)

The analysis of the annual current and deferred income tax expenses reveals notable fluctuations in tax-related figures over the reviewed periods. The data indicates varying trends for current taxes, deferred taxes, and total income tax expense.

Current Taxes

The amount of current taxes shows considerable variability. It increased significantly from approximately $268.2 million in the first period to a peak of around $1.28 billion in the second period, followed by a decline to roughly $925.4 million in the third period. Subsequently, it surged again to about $1.34 billion in the fourth period, then decreased progressively over the last two periods to approximately $1.22 billion and $662.3 million, respectively. This pattern suggests fluctuating taxable income or changes in tax rates and rules impacting the company annually.

Deferred Taxes

The deferred tax figures demonstrate more volatility and include both positive and negative values, indicating the recognition of deferred tax assets and liabilities. The period starting at negative $28.5 million saw a larger negative amount of $125 million in the second period, implying increased deferred tax liabilities or reduced deferred tax assets. The figure reversed to a positive $23.1 million in the third period, suggesting a favorable deferred tax adjustment. Post this positive surge, deferred taxes reverted to negative values in the subsequent periods, albeit smaller in magnitude compared to earlier negatives, indicating ongoing but less pronounced deferred tax liabilities.

Income Tax Expense

The total income tax expense mirrors the general trend observed in current taxes, starting at $239.7 million and rising sharply to about $1.16 billion in the second period. It then marginally decreased to $948.5 million in the third period but increased again to approximately $1.28 billion in the following year. The expense slightly decreased over the final two periods, reaching $1.21 billion and then dropping substantially to $650.6 million. This pattern corresponds to the combination of current and deferred tax movements and reflects the overall tax burden borne in each fiscal year.

Overall, the data reveals a high degree of year-to-year variation in both current and deferred tax expenses, suggesting fluctuating profitability, tax regulations, or timing differences affecting taxable income recognition. The presence of both deferred tax liabilities and assets within different years implies ongoing adjustments to anticipated future tax obligations. The notable decrease in the most recent year for both current taxes and total income tax expense could indicate a reduction in taxable income or potentially the impact of tax planning strategies or changes in tax legislation.

The effective income tax rate has shown a consistent upward trend over the observed periods, increasing from 20.6% in 2020 to 25.9% in 2025. This signifies a gradual rise in the overall tax burden.

Statutory U.S. federal income tax rate

Remains constant at 21% throughout all periods, indicating no change in the federal tax policy affecting the entity.

State income taxes, net of federal tax benefit

There is a steady increase observed, from 2.2% in 2020 up to approximately 3.4% in the latest years, suggesting growing state tax liabilities or reduced federal benefits against state taxes over time.

Foreign rate differential

This rate started negative at -3.2% in 2020, turning positive in 2021, and then stabilizing near 0.3%-0.4% from 2022 onwards, indicating improvement in the foreign tax environment or better foreign tax planning.

Change in tax rates

Visible only in 2020 and 2021 with negative impacts of -2.2% and -1.3% respectively, after which there are no further recorded changes, implying that the tax rate changes impacted only early years of the timeline.

Residual tax on foreign earnings

Absent in earlier years, appearing as 0.4% in 2024 and surging to 3.6% in 2025, this suggests a significant new tax liability on foreign earnings emerging in the last two periods.

Foreign derived intangible income

Reported as negative impact starting from 2023 at -0.8% and deepening to -1.6% in 2025, reflecting a growing unfavorable effect of foreign intangible income taxation on the effective tax rate.

Tax status change of foreign entity

Impacts only the final year with a negative 1.4%, which might indicate a structural change or reclassification of foreign operations affecting tax obligations.

Other, net

Displays fluctuations, starting positive at 2.8% in 2020, turning negative for the subsequent three years, then returning near zero in the last two years, indicating variable miscellaneous factors affecting the effective tax rate.

Overall, the increase in the effective income tax rate is primarily driven by rising state taxes, the introduction and growth of residual tax on foreign earnings, and the negative impact of foreign derived intangible income. The consistent federal statutory rate suggests that changes arise mainly from other tax components, both domestically and internationally. The variability in other net factors and the recent tax status changes of foreign entities further contribute to the rising tax burden.

The analysis of the annual financial data reveals several notable trends across the key balance sheet items over the observed periods.

Operating Lease Liabilities

There is a general upward trend in operating lease liabilities, increasing from approximately 2,313,000 thousand US dollars in 2020 to around 2,646,700 thousand US dollars in 2025. Despite minor fluctuations, this indicates growing lease obligations over the years.

Stored Value Card Liability and Deferred Revenue

This liability shows a gradual but consistent decline from 1,678,600 thousand US dollars in 2020 to 1,593,000 thousand US dollars in 2025, suggesting a decrease in outstanding prepaid customer balances or deferred revenue.

Intangible Assets and Goodwill

The value of intangible assets and goodwill experienced an increase from 248,600 thousand US dollars in 2020 to a peak of 372,600 thousand US dollars in 2024, followed by a slight decrease to 355,500 thousand US dollars in 2025. This trend reflects periodic adjustments possibly due to acquisitions, impairments, or revaluations.

Other Assets

Other assets have steadily increased from 554,400 thousand US dollars in 2020 to 780,900 thousand US dollars in 2025, indicating rising miscellaneous asset balances.

Deferred Tax Assets

Deferred tax assets have shown a consistent upward trajectory, growing from 4,794,600 thousand US dollars in 2020 to 5,376,100 thousand US dollars in 2025. This reflects increasing temporary differences favorable to future tax benefits.

Valuation Allowance

The valuation allowance against deferred tax assets fluctuated, increasing in absolute size from -239,400 thousand US dollars in 2020 to -275,300 thousand US dollars in 2021, then decreasing overall to -189,200 thousand US dollars in 2025. This reduction in allowance suggests improved expectations of realizability for deferred tax assets.

Net Deferred Tax Asset

When netting the valuation allowance, the net deferred tax asset grew from approximately 4,555,200 thousand US dollars in 2020 to 5,186,900 thousand US dollars in 2025, consistent with the increase in gross deferred tax assets and the decrease in valuation allowance.

Operating Lease Right-of-Use Assets

These assets are reported as negative values, indicative of contra accounts, and demonstrate a pattern similar to operating lease liabilities: a rise from -2,191,800 thousand US dollars in 2020 to around -2,466,800 thousand US dollars in 2025, reflecting increased leased asset recognition.

Property, Plant, and Equipment

Property, plant, and equipment values, also presented as negative figures, show a consistent increasing negative balance from -463,300 thousand US dollars in 2020 to -641,300 thousand US dollars in 2025. This trend suggests growing net book value or possibly growing accumulated depreciation balances.

Other Negative Assets

Other negative asset entries remain relatively stable with a slight increase in their negative balances from -268,300 thousand US dollars in 2020 to -302,300 thousand US dollars in 2025.

Deferred Tax Liabilities

Deferred tax liabilities have increased steadily from -2,923,400 thousand US dollars in 2020 to -3,410,400 thousand US dollars in 2025, indicating higher future tax obligations associated with taxable temporary differences.

Net Deferred Tax Asset (Liability)

The net deferred tax asset (liability), integrating both deferred tax assets and liabilities, has remained positive throughout the period and exhibited minor fluctuations from 1,631,800 thousand US dollars in 2020 to 1,776,500 thousand US dollars by 2025, showing a generally stable but slightly improving net tax position.

The analysis of deferred income tax assets and liabilities over the assessed periods reveals specific trends and insights into the company's tax position and potential deferred tax impacts.

Deferred Income Tax Assets

The deferred income tax assets show a relatively stable trend with minor fluctuations across the periods. Beginning at approximately 1,789,900 thousand US dollars, the figure slightly increased to 1,874,800 thousand in the following year, indicating a rise in temporary differences or tax benefits that the company expects to realize in the future. Subsequently, there was a decline to 1,799,700 thousand and a further gradual decrease to 1,766,700 thousand in 2024, before a modest recovery to 1,826,900 thousand in the most recent period. This pattern suggests minor adjustments in the company's deferred tax asset base, reflecting changes in taxable temporary differences or tax rates.

Deferred Income Tax Liabilities

The deferred income tax liabilities, reported within other long-term liabilities, present a notable downward trend from 158,100 thousand US dollars in the earliest period to a low point of 14,600 thousand in 2023. This significant decline suggests that the company either reduced its taxable temporary differences or settled certain deferred tax liabilities. However, from 2023 to 2025, the liabilities increased again to 50,400 thousand, indicating a partial reversal or new deferred tax obligations arising during the most recent years.

Overall Tax Position Insights

While deferred income tax assets remain relatively steady, the substantial decline followed by a moderate increase in deferred liabilities indicates dynamic changes in the company's temporary differences and tax planning strategies. The widening gap between assets and liabilities over the years may positively impact future tax expense recognition. These fluctuations could be influenced by variations in asset depreciation, inventory accounting, or loss carryforwards. The stability in deferred tax assets coupled with variability in liabilities highlights the nuanced impact of fiscal policies and internal tax strategies on the company's balance sheet.

The analysis of the financial data over the reported periods reveals several key trends and insights related to the company's asset base, liabilities, shareholder deficit, and net earnings, both in reported and adjusted terms.

Assets

Reported total assets showed fluctuations, with an initial increase from 29,374,500 thousand USD in 2020 to a peak of 31,392,600 thousand USD in 2021, followed by a decline reaching 27,978,400 thousand USD in 2022. Subsequently, assets increased again, reaching 32,019,700 thousand USD by 2025. Adjusted total assets followed a similar pattern but consistently remained lower than the reported figures, indicating the impact of tax adjustments on asset valuation. This adjustment reflects a prudent view of asset base quality and underlying obligations.

Liabilities

Both reported and adjusted total liabilities depict a generally increasing trend over the timeline. Reported liabilities grew from 37,173,900 thousand USD in 2020 to 40,108,900 thousand USD in 2025. The adjusted liabilities track closely with the reported figures, slightly lower or equal, indicating limited but consistent impact of deferred tax adjustments on liabilities. The increasing liability trend could imply greater leverage or increased operational commitments.

Shareholders’ Deficit

The shareholders’ deficit remains negative throughout all periods, signifying a deficit rather than equity. The reported shareholders’ deficit initially improved from -7,805,100 thousand USD in 2020 to -5,321,200 thousand USD in 2021 but then worsened again to -8,706,600 thousand USD in 2022. Although there was some recovery afterward, the deficit increased once more by 2025 to -8,096,600 thousand USD. The adjusted shareholders’ deficit follows a similar trajectory but with consistently larger negative values, indicating that deferred tax adjustments exacerbate the deficit, highlighting potential balance sheet weaknesses or accumulated losses impacting equity.

Net Earnings

Reported net earnings attributable to the company displayed significant volatility. Earnings surged from 928,300 thousand USD in 2020 to a peak of 4,199,300 thousand USD in 2021, declined to 3,281,600 thousand USD in 2022, rose again to 4,124,500 thousand USD in 2023, and then steadily declined to 1,856,400 thousand USD by 2025. Adjusted net earnings closely mirror the reported earnings with marginal differences, indicating that deferred tax adjustments have a relatively minor impact on reported profitability. Nonetheless, the net earnings decline in the final years suggests some operational or market challenges affecting performance.

In summary, the company’s asset base shows cyclical variation, while liabilities and shareholders’ deficit generally increase over time, demonstrating rising financial obligations and equity challenges. The net earnings exhibit high variability, with a recent downward trend despite previously strong performance. Adjustments for deferred income taxes subtly reduce asset values, increase the deficit, and marginally impact earnings, reflecting conservative financial reporting adjustments. These patterns may warrant focused strategic financial management to address growing liabilities and shareholder deficit concerns while stabilizing profitability.

The financial indicators over the analyzed periods reveal notable variability and some clear trends in the company's profitability and efficiency metrics.

Net Profit Margin

The reported net profit margin experienced a significant increase from 3.95% in the earliest period to a peak of 14.45% by the second period, followed by a decline over the subsequent years down to 4.99% by the latest period. The adjusted net profit margin follows a very similar pattern, indicating that the adjustments made for deferred income tax had minimal impact on the overall profitability trend. This pattern suggests a period of improved profitability followed by a gradual reduction in net margins.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios display a consistent upward trend, demonstrating improved efficiency in asset utilization. The reported ratio increased from 0.80 to above 1.15 over the periods, with the adjusted values slightly higher, starting at 0.85 and reaching 1.23 by the final period. This progression reflects the company’s growing ability to generate sales from its asset base.

Return on Assets (ROA)

The reported ROA shows a sharp rise from 3.16% to a peak of 14.01%, then a decrease down to 5.80% in the latest period. The adjusted ROA follows a similar trajectory but remains consistently slightly higher than the reported metrics, indicating the adjusted performance accounting for deferred income tax typically yields a more favorable outlook. This fluctuation suggests the company saw strong asset profitability gains mid-period but experienced some weakening towards the end.

Financial Leverage and Return on Equity (ROE)

Data for financial leverage and ROE were not provided, limiting the ability to assess leverage effects and equity profitability directly. Consequently, insights into how capital structure influenced returns remain unavailable from this dataset.

In summary, the company demonstrated a notable increase in profitability and asset use efficiency during the middle of the analyzed periods, as evidenced by net profit margins, ROA, and asset turnover ratios. However, these metrics declined toward the most recent periods, indicating potential challenges impacting profitability. The adjustments for deferred income tax do not significantly alter these observed trends. Further analysis including leverage and equity returns would be necessary for a comprehensive performance assessment.

The financial data exhibits notable fluctuations in net earnings and profit margins over the examined periods. Both reported and adjusted net earnings attributable to the company demonstrate significant variability, with a peak observed in the fiscal year ending October 3, 2021, followed by a general downward trend through subsequent years.

Net Earnings Trends

The reported net earnings rose sharply from approximately $928 million in 2020 to about $4.2 billion in 2021. This surge was followed by a decline to $3.28 billion in 2022 and a partial recovery to roughly $4.12 billion in 2023. However, after 2023, net earnings decreased consistently, reaching approximately $1.86 billion by 2025. Adjusted net earnings follow a similar pattern, with a peak around $4.07 billion in 2021 and subsequent declines, ending near $1.84 billion in 2025.

Net Profit Margin Trends

The reported net profit margin mirrored net earnings behavior, increasing from 3.95% in 2020 to a high of 14.45% in 2021. This was followed by declines to around 10.18% and 11.46% in 2022 and 2023 respectively, and a sharp drop to 4.99% by 2025. Adjusted net profit margins closely align with these figures, maintaining a slightly lower margin overall. The profit margins indicate a significant peak in 2021 with reduced profitability in later years.

Comparative Observations

The adjusted figures are consistently marginally below the reported values, suggesting that adjustments, likely related to income tax considerations and other factors, slightly reduce the earnings and profit margins. Despite these adjustments, the overall trend and relative movements remain consistent between reported and adjusted data.

In summary, the company experienced a strong performance spike in 2021 with high net earnings and margins, followed by a downward trend in both profitability and earnings through 2025. The data suggests challenges in sustaining peak profitability levels achieved in 2021, indicating potential operational or market pressures in recent years.

The analysis of the asset and asset turnover data over the six-year period reveals several notable trends and insights.

Total Assets

Reported total assets show a fluctuating pattern with an initial increase from approximately 29.4 billion US dollars in 2020 to just under 31.4 billion in 2021, followed by a decline to around 27.98 billion in 2022. Subsequently, there is a recovery trend reaching above 31.3 billion by 2024 and slightly increasing to approximately 32 billion by 2025.

Adjusted total assets follow a similar trend but with consistently lower values compared to reported assets, indicating adjustments for deferred income tax effects that reduce the total asset base. Adjusted assets start at roughly 27.6 billion in 2020, dip in 2022, then reflect a positive recovery reaching close to 30.2 billion by 2025.

Total Asset Turnover

Reported total asset turnover exhibits a steady improvement over time, increasing from 0.8 in 2020 to a peak of 1.22 in 2023. A slight decline to 1.15 occurs in 2024, followed by a modest rebound to 1.16 in 2025. This pattern indicates increasingly efficient utilization of assets to generate sales through 2023, with minor volatility thereafter.

Adjusted total asset turnover demonstrates a similar but consistently higher trajectory than the reported turnover, reflecting the impact of adjustments on asset valuation. The ratio improves from 0.85 in 2020 to 1.3 in 2023, then slightly declines to 1.22 in 2024 and rebounds to 1.23 in 2025. The higher values relative to reported turnover suggest a proportionally greater adjustment effect on the asset base than on revenue.

Overall, the data reflect a company that experienced a dip in asset base in 2022 but has generally improved asset utilization ratios over the period analyzed. Adjustments related to deferred income tax result in consistently lower asset bases and consequently higher asset turnover ratios, indicating that these adjustments materially affect the interpretation of asset efficiency. The trends suggest an emphasis on enhancing asset productivity, particularly between 2021 and 2023, with stable performance sustained in the subsequent years.

The analysis of the financial data over the reported periods reveals several key trends in the company's assets and shareholders’ equity, both in reported and adjusted terms.

Total Assets

The reported total assets exhibit moderate fluctuations over the six years. Starting at approximately $29.37 billion in 2020, they increase to around $31.39 billion in 2021 but then decrease to about $27.98 billion in 2022. Subsequently, total assets steadily rise, reaching approximately $31.32 billion in 2024 and slightly higher at $32.02 billion in 2025. The adjusted total assets follow a similar pattern but are consistently lower than the reported figures, reflecting adjustments likely related to deferred income taxes. Adjusted assets start at about $27.58 billion in 2020, dip to roughly $26.18 billion in 2022, and then increase to around $30.19 billion by 2025.

Shareholders’ Deficit

The reported shareholders’ deficit shows significant variability over the period. It begins at a deficit of approximately $7.81 billion in 2020, improves to about $5.32 billion in 2021, which indicates a temporary reduction in the negative equity position. However, the deficit widens sharply to around $8.71 billion in 2022, then fluctuates between $7.45 billion and $8.09 billion in the following years. The adjusted shareholders’ deficit follows a similar trend but remains greater in magnitude throughout, indicating deeper equity reductions when adjustments are accounted for. It starts at about $9.44 billion in 2020, improves to $7.05 billion in 2021, worsens significantly to $10.39 billion in 2022, and then oscillates somewhat, reaching nearly $9.87 billion by 2025.

Financial Leverage

Data for both reported and adjusted financial leverage ratios are not available for the examined periods, and therefore no analysis can be made in this regard.

Overall, the company shows an increase in asset base over the latter part of the period, which may suggest growth or asset revaluation. However, the persistent and substantial shareholders’ deficit, particularly when adjusted, indicates ongoing challenges in equity value. The fluctuations in the deficit could reflect operational results, accounting adjustments related to income taxes, or other factors impacting equity. The consistent gap between reported and adjusted figures highlights the material impact of deferred income tax adjustments on the company's financial position.

Net Earnings Attributable to Starbucks

The reported net earnings displayed significant volatility over the period, peaking in 2021 at approximately $4.2 billion before declining in subsequent years. After 2021, earnings decreased notably, registering about $1.9 billion in 2025. The adjusted net earnings followed a similar pattern, with a peak around $4.07 billion in 2021 and a steady decline afterwards, reaching approximately $1.84 billion in 2025. Both reported and adjusted figures show a high correlation, with adjusted earnings consistently slightly lower than reported ones, indicating relatively modest adjustments for deferred income taxes or other non-operational factors.

Shareholders' Deficit

The reported shareholders’ deficit has remained significantly negative throughout the timeline, with some fluctuations. It improved from a deficit of approximately -$7.8 billion in 2020 to about -$5.3 billion in 2021, indicating a temporary reduction in negative equity. However, the deficit worsened sharply in 2022 to approximately -$8.7 billion and fluctuated within a similar negative range, ending near -$8.1 billion in 2025. The adjusted shareholders’ deficit shows a parallel trend but reflects even more pronounced negative values, consistently exceeding the reported deficit. The adjusted figures ranged from roughly -$9.4 billion in 2020, improving slightly in 2021, then deteriorating again, culminating near -$9.9 billion in 2025. This suggests that adjustments related to deferred taxes or other accounting entries accentuate the reported negative equity position.

Return on Equity (ROE)

Data for both reported and adjusted ROE is missing for all evaluated periods, preventing trend analysis or performance evaluation from this perspective. The absence of ROE figures may relate to the persistent negative shareholders’ equity, which often complicates ROE calculation and interpretation.

Overall Insights

The company’s profitability demonstrated strong results in 2021, followed by a pronounced decline in the following years, with adjusted earnings closely mirroring reported earnings. The persistent and substantial shareholders’ deficits, worsened by adjustments, highlight ongoing equity challenges. The lack of ROE data further emphasizes difficulties in assessing equity returns, likely connected to the negative equity balance. These trends indicate financial stress or restructuring efforts impacting equity and net earnings over time.

The financial data over the six-year period reveals several notable trends in earnings, asset base, and returns on assets (ROA) for the company.

Net Earnings

Reported net earnings exhibited significant volatility, initially increasing sharply from 928.3 million to 4.1993 billion between the first and second periods, followed by a decline in the subsequent years. The peak was observed in the year ending October 3, 2021, after which earnings decreased steadily to 1.8564 billion by the last period. Adjusted net earnings followed a similar pattern, with a peak of 4.0743 billion in 2021 and a subsequent decline to 1.8447 billion in 2025, closely tracking reported figures but generally slightly lower.

Total Assets

The reported total assets showed moderate fluctuations, rising from approximately 29.37 billion in 2020 to peak at 31.39 billion in 2021, then declining in 2022 and 2023 before gradually increasing again through to 2025 reaching 32.02 billion. Adjusted total assets also followed this pattern but remained consistently lower than reported total assets, indicating adjustments made for deferred tax or other factors lowered the asset base on an adjusted basis.

Return on Assets (ROA)

Reported ROA exhibited a substantial increase from 3.16% in 2020 to a peak of 14.01% in 2023, suggesting improved asset efficiency in generating earnings during this period. However, the ROA then declined sharply to 5.8% in 2025. The adjusted ROA trend was similar but consistently showed slightly higher returns than reported ROA, peaking at 14.69% in 2023 before decreasing to 6.11% in 2025. This suggests that while the adjustments have a modest impact, the overall trend and asset performance patterns remain consistent.

Overall, the data reflects a peak period around 2021-2023 characterized by strong earnings growth and high asset returns, followed by a notable downturn in earnings and returns despite an increase in asset base towards the most recent period. The decline in both net earnings and ROA in the latter years could indicate challenges affecting profitability or efficiency in asset utilization. The adjustments made for deferred taxes and other factors have a persistent but relatively small impact on financial metrics, reinforcing the primary trends observed in the reported figures.