Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Starbucks Corp., liquidity ratios
Based on: 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29).
- Current Ratio
- The current ratio exhibited an increasing trend from 0.92 in 2019 to a peak of 1.2 in 2021, indicating improved short-term liquidity during this period. However, from 2022 onwards, the ratio declined steadily to 0.75 by 2024, suggesting a weakening ability to cover short-term liabilities with current assets in recent years.
- Quick Ratio
- This ratio followed a similar pattern to the current ratio, rising from 0.59 in 2019 to 0.93 in 2021, which reflects an improved liquidity position excluding inventory. Post-2021, it decreased sharply to 0.48 in 2022 before seeing slight increases but remaining below the earlier peak, settling at 0.52 in 2024. This indicates a deterioration in the company’s liquid asset coverage of current liabilities after 2021.
- Cash Ratio
- The cash ratio increased from 0.45 in 2019 to 0.81 in 2021, marking a significant strengthening of the most liquid assets relative to current liabilities. Similar to other liquidity ratios, the cash ratio fell sharply to 0.35 in 2022 and showed marginal recovery but remained relatively low at 0.39 in 2024. This decline points to a reduced cushion of cash and cash equivalents against short-term obligations over the last three years.
Current Ratio
Starbucks Corp., current ratio calculation, comparison to benchmarks
| Sep 29, 2024 | Oct 1, 2023 | Oct 2, 2022 | Oct 3, 2021 | Sep 27, 2020 | Sep 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Current assets | 6,847,400) | 7,303,400) | 7,018,700) | 9,756,400) | 7,806,400) | 5,653,900) | |
| Current liabilities | 9,070,000) | 9,345,300) | 9,151,800) | 8,151,400) | 7,346,800) | 6,168,700) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 0.75 | 0.78 | 0.77 | 1.20 | 1.06 | 0.92 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Airbnb Inc. | 1.69 | 1.66 | 1.86 | 1.95 | 1.73 | — | |
| Booking Holdings Inc. | 1.31 | 1.28 | 1.86 | 2.10 | 3.56 | — | |
| Chipotle Mexican Grill Inc. | 1.52 | 1.57 | 1.28 | 1.58 | 1.73 | — | |
| McDonald’s Corp. | 1.19 | 1.16 | 1.43 | 1.78 | 1.01 | — | |
| Current Ratio, Sector | |||||||
| Consumer Services | 1.28 | 1.25 | 1.46 | 1.71 | 1.60 | — | |
| Current Ratio, Industry | |||||||
| Consumer Discretionary | 1.22 | 1.20 | 1.15 | 1.25 | 1.18 | — | |
Based on: 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29).
1 2024 Calculation
Current ratio = Current assets ÷ Current liabilities
= 6,847,400 ÷ 9,070,000 = 0.75
2 Click competitor name to see calculations.
The analysis of the financial data over the six-year period reveals several notable trends in the liquidity position. Current assets exhibited a general upward trend from 2019 to 2021, increasing from approximately 5.65 billion to 9.76 billion US dollars. However, from 2021 onwards, current assets declined, falling to around 6.85 billion by 2024. This decline suggests a reduction in liquid or short-term resources in recent years.
Current liabilities increased consistently throughout the period, rising from about 6.17 billion US dollars in 2019 to approximately 9.07 billion in 2024. This steady growth in short-term obligations indicates a growing financial commitment that must be met within a year.
The combined effect of these movements is reflected in the current ratio. Initially, the current ratio improved from 0.92 in 2019 to a peak of 1.20 in 2021, indicating better short-term financial stability during this period. However, post-2021, the current ratio declined sharply to 0.75 by 2024, which is below 1.0. This decrease signals a weakening liquidity position, where current liabilities increasingly surpass current assets, potentially heightening liquidity risk.
- Current Assets Trend
- Increased significantly until 2021, followed by a notable decline through 2024.
- Current Liabilities Trend
- Consistent increase across all periods, indicating growth in short-term obligations.
- Current Ratio Trend
- Improved from 0.92 to 1.20 by 2021, then declined sharply to 0.75 by 2024.
- Overall Liquidity Insight
- The company's ability to cover short-term liabilities weakened in the latter years, emphasizing an increased liquidity risk and potential challenges in meeting current obligations promptly.
Quick Ratio
Starbucks Corp., quick ratio calculation, comparison to benchmarks
| Sep 29, 2024 | Oct 1, 2023 | Oct 2, 2022 | Oct 3, 2021 | Sep 27, 2020 | Sep 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Cash and cash equivalents | 3,286,200) | 3,551,500) | 2,818,400) | 6,455,700) | 4,350,900) | 2,686,600) | |
| Short-term investments | 257,000) | 401,500) | 364,500) | 162,200) | 281,200) | 70,500) | |
| Accounts receivable, net | 1,213,800) | 1,184,100) | 1,175,500) | 940,000) | 883,400) | 879,200) | |
| Total quick assets | 4,757,000) | 5,137,100) | 4,358,400) | 7,557,900) | 5,515,500) | 3,636,300) | |
| Current liabilities | 9,070,000) | 9,345,300) | 9,151,800) | 8,151,400) | 7,346,800) | 6,168,700) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.52 | 0.55 | 0.48 | 0.93 | 0.75 | 0.59 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Airbnb Inc. | 1.64 | 1.62 | 1.83 | 1.91 | 1.69 | — | |
| Booking Holdings Inc. | 1.24 | 1.20 | 1.73 | 2.00 | 3.38 | — | |
| Chipotle Mexican Grill Inc. | 1.34 | 1.37 | 1.09 | 1.35 | 1.28 | — | |
| McDonald’s Corp. | 0.90 | 1.03 | 1.24 | 1.64 | 0.90 | — | |
| Quick Ratio, Sector | |||||||
| Consumer Services | 1.15 | 1.13 | 1.29 | 1.56 | 1.41 | — | |
| Quick Ratio, Industry | |||||||
| Consumer Discretionary | 0.90 | 0.85 | 0.81 | 0.92 | 0.88 | — | |
Based on: 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29).
1 2024 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 4,757,000 ÷ 9,070,000 = 0.52
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets demonstrated a general increase from 2019 to 2021, rising from $3,636,300 thousand to $7,557,900 thousand. However, there was a notable decline in 2022, with total quick assets dropping significantly to $4,358,400 thousand. The values slightly recovered in 2023 to $5,137,100 thousand, but decreased again in 2024 to $4,757,000 thousand, indicating some volatility in the company's liquid asset position during the later years.
- Current liabilities
- Current liabilities showed a consistent upward trend over the majority of the period. They increased steadily from $6,168,700 thousand in 2019 to $9,345,300 thousand in 2023. There was a minor decrease in 2024 to $9,070,000 thousand, but overall, liabilities have grown substantially, which could imply increased short-term obligations or operational expansions.
- Quick ratio
- The quick ratio followed a rising trend from 0.59 in 2019 to 0.93 in 2021, indicating an improvement in the company's ability to cover short-term liabilities with liquid assets. However, there was a sharp decline starting in 2022, falling to 0.48. Some recovery was observed in 2023, with the ratio increasing to 0.55, but it declined again in 2024 to 0.52. This drop suggests a weakening liquidity position relative to current liabilities during the recent years, despite earlier improvements.
- Summary
- Overall, the data reflect a period of significant growth in liquid assets and improved liquidity up to 2021. Following that, there has been a decline in quick assets coupled with continuously increasing current liabilities, which negatively impacted the quick ratio. The most recent years show a struggling liquidity position, as the company holds fewer quick assets relative to growing short-term liabilities. This trend signals potential liquidity risk that may require management's attention to maintain financial stability.
Cash Ratio
Starbucks Corp., cash ratio calculation, comparison to benchmarks
| Sep 29, 2024 | Oct 1, 2023 | Oct 2, 2022 | Oct 3, 2021 | Sep 27, 2020 | Sep 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Cash and cash equivalents | 3,286,200) | 3,551,500) | 2,818,400) | 6,455,700) | 4,350,900) | 2,686,600) | |
| Short-term investments | 257,000) | 401,500) | 364,500) | 162,200) | 281,200) | 70,500) | |
| Total cash assets | 3,543,200) | 3,953,000) | 3,182,900) | 6,617,900) | 4,632,100) | 2,757,100) | |
| Current liabilities | 9,070,000) | 9,345,300) | 9,151,800) | 8,151,400) | 7,346,800) | 6,168,700) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.39 | 0.42 | 0.35 | 0.81 | 0.63 | 0.45 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Airbnb Inc. | 1.04 | 1.01 | 1.21 | 1.31 | 1.24 | — | |
| Booking Holdings Inc. | 1.03 | 0.95 | 1.46 | 1.79 | 3.23 | — | |
| Chipotle Mexican Grill Inc. | 1.22 | 1.26 | 0.98 | 1.23 | 1.16 | — | |
| McDonald’s Corp. | 0.28 | 0.67 | 0.68 | 1.17 | 0.56 | — | |
| Cash Ratio, Sector | |||||||
| Consumer Services | 0.82 | 0.80 | 0.95 | 1.24 | 1.16 | — | |
| Cash Ratio, Industry | |||||||
| Consumer Discretionary | 0.51 | 0.48 | 0.47 | 0.63 | 0.58 | — | |
Based on: 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27), 10-K (reporting date: 2019-09-29).
1 2024 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 3,543,200 ÷ 9,070,000 = 0.39
2 Click competitor name to see calculations.
- Total cash assets
- The total cash assets showed an increasing trend from 2019 to 2021, rising from 2,757,100 thousand USD to 6,617,900 thousand USD. However, this was followed by a sharp decline in 2022 to 3,182,900 thousand USD. Subsequently, there was a moderate recovery in 2023 to 3,953,000 thousand USD, but a slight decrease occurred again in 2024 to 3,543,200 thousand USD. Overall, the cash assets peaked in 2021 before falling and stabilizing at a lower level in the following years.
- Current liabilities
- Current liabilities displayed a consistent upward trend from 2019 through 2023, increasing from 6,168,700 thousand USD to 9,345,300 thousand USD. In 2024, a marginal reduction occurred, lowering the liabilities to 9,070,000 thousand USD. Despite this minor decrease, liabilities remain significantly higher compared to 2019 levels, indicating an overall increase in short-term obligations over the analyzed period.
- Cash ratio
- The cash ratio, which measures liquidity by comparing cash holdings to current liabilities, increased steadily from 0.45 in 2019 to a peak of 0.81 in 2021, reflecting improving liquidity during that period. Afterward, the ratio declined substantially to 0.35 in 2022, indicating reduced liquidity despite a slight improvement in total cash assets that year. The ratio then edged upward to 0.42 in 2023 but decreased again to 0.39 in 2024. This suggests fluctuating liquidity levels with a general weakening trend after 2021.