Starbucks Corp. (NASDAQ:SBUX)

The analysis of liquidity ratios over the periods from 2020 to 2025 reveals notable trends in the company's short-term financial health.

Current Ratio

The current ratio increased from 1.06 in 2020 to 1.20 in 2021, indicating a temporary improvement in the ability to cover short-term liabilities with current assets. However, from 2022 onwards, the ratio consistently declined, reaching 0.72 by 2025. This downward trend suggests a weakening liquidity position, with current assets becoming increasingly insufficient to meet current liabilities.

Quick Ratio

Similarly, the quick ratio demonstrated growth between 2020 (0.75) and 2021 (0.93), signaling improved immediate liquidity excluding inventory. After 2021, the quick ratio dropped substantially, falling to as low as 0.46 by 2025. This decline reflects diminishing liquid assets relative to current liabilities, indicating potential difficulties in covering obligations without relying on inventory sales.

Cash Ratio

The cash ratio, which measures the most liquid assets, rose from 0.63 in 2020 to 0.81 in 2021, consistent with the other liquidity measures. Afterward, the ratio decreased steadily, reaching 0.34 in 2025. This significant reduction suggests a lowering cash reserve relative to current liabilities, highlighting reduced capacity to immediately settle short-term obligations.

Overall, the liquidity ratios exhibit a peak in 2021 across all measures followed by a persistent decline through 2025. This pattern indicates that although the company’s liquidity improved initially, there is an emerging concern regarding its short-term financial stability due to decreasing asset coverage of current liabilities over the recent years.

Current Assets

Current assets demonstrate fluctuations over the periods under review. Starting at approximately 7,806,400 thousand US dollars in 2020, the figure increased significantly in 2021 to about 9,756,400 thousand US dollars. However, a notable decline occurred in 2022, dropping to 7,018,700 thousand US dollars. In the subsequent years, the values showed minor variations, decreasing slightly in 2024 to 6,847,400 thousand US dollars before rising again to 7,382,300 thousand US dollars in 2025.

Current Liabilities

Current liabilities have exhibited a generally increasing trend throughout the period. Beginning at 7,346,800 thousand US dollars in 2020, the amount rose to 8,151,400 thousand US dollars in 2021. The upward movement continued sharply to 9,151,800 thousand US dollars in 2022, followed by a smaller increase in 2023 reaching 9,345,300 thousand US dollars. While 2024 saw a slight decrease to 9,070,000 thousand US dollars, liabilities surged again in 2025 to 10,210,400 thousand US dollars, the highest recorded in the dataset.

Current Ratio

The current ratio depicts a declining trend over the observed years. It began at a reasonably stable level of 1.06 in 2020 and improved slightly to 1.20 in 2021, indicating a relatively comfortable short-term liquidity position. However, after 2021, the ratio dropped significantly, falling to 0.77 in 2022 and maintaining similar values in subsequent years: 0.78 in 2023, 0.75 in 2024, and reaching a low of 0.72 in 2025. This indicates a weakening ability to cover current liabilities with current assets, suggesting increasing liquidity risk.

The analysis of the financial data reveals several noteworthy trends in the liquidity position over the reported periods.

Total Quick Assets

The total quick assets display significant fluctuations. Starting at approximately 5.52 billion USD in 2020, the figure peaks at about 7.56 billion USD in 2021 before encountering a sharp decrease to roughly 4.36 billion USD in 2022. It subsequently recovers slightly in 2023 to around 5.14 billion USD but then follows a declining trajectory in the two subsequent years, reaching approximately 4.74 billion USD in 2025. This pattern indicates considerable volatility in the immediate liquid resources available.

Current Liabilities

Current liabilities exhibit a generally increasing trend throughout the period. From about 7.35 billion USD in 2020, liabilities increase steadily each year, with minor fluctuations, reaching over 10.21 billion USD by 2025. This steady rise suggests mounting short-term obligations or operational expenses requiring settlement within the year.

Quick Ratio

The quick ratio demonstrates a clear declining trend after initially improving in 2021. Starting at 0.75 in 2020, it improves to 0.93 in 2021 but then drops sharply to 0.48 in 2022. Although there is a minor recovery in 2023 to 0.55, the ratio subsequently diminishes further to 0.46 by 2025. This downward trend indicates a worsening liquidity position, implying that the company holds fewer liquid assets relative to its current liabilities over time.

Overall, the simultaneous decline in quick assets and rise in current liabilities has led to a consistent deterioration in the quick ratio after 2021. This suggests increasing liquidity risk, which may affect the company's ability to meet short-term obligations promptly. It would be prudent to investigate the causes behind the volatility in quick assets and the steady growth in current liabilities to assess the sustainability of this trend and possible implications for financial stability.

Total Cash Assets

The total cash assets exhibited significant fluctuation over the observed periods. Initially, there was an increase from 4,632,100 thousand US dollars to a peak of 6,617,900 thousand US dollars, followed by a sharp decline to 3,182,900 thousand US dollars. In subsequent periods, the cash assets showed moderate recovery but remained below the earlier high, settling around 3,467,000 thousand US dollars by the latest period. The overall trend suggests volatility and a possible reallocation or utilization of cash resources over time.

Current Liabilities

Current liabilities showed a consistent upward trend throughout the timeline. Starting at 7,346,800 thousand US dollars, they increased steadily each period, reaching 10,210,400 thousand US dollars in the latest period. This progressive rise indicates growing short-term obligations, which may reflect expanded operational activities or increased financial leverage.

Cash Ratio

The cash ratio, representing liquidity by comparing cash assets to current liabilities, demonstrated notable volatility. Initially, there was an improvement from 0.63 to 0.81, indicating enhanced liquidity. However, this was followed by a period of decline, dropping to 0.35 and fluctuating around 0.34-0.42 in later periods. The sustained lower cash ratio levels suggest tighter liquidity conditions relative to current liabilities, potentially implying increased risk in meeting short-term obligations solely with cash assets.