Starbucks Corp. (NASDAQ:SBUX)

Current Ratio

The current ratio exhibits considerable fluctuation over the observed periods. Starting at 1.41 in the final quarter of 2018, the ratio experiences a notable decline reaching a low of 0.68 by the end of 2019. Subsequently, there is an improvement through 2020 and into early 2021, with the ratio stabilizing around the 1.0 to 1.2 mark. However, from 2021 onward, there is a gradual but persistent decline, with ratios generally hovering below 1.0, indicating a potential tightening in short-term liquidity. By mid-2025, the current ratio falls to around 0.76, reflecting a weaker capacity to cover short-term obligations with current assets.

Quick Ratio

The quick ratio follows a similar overall trajectory to the current ratio but consistently registers lower values, suggesting higher inventory levels relative to other current assets. Beginning at 1.05 in late 2018, it sharply decreases to below 0.5 by the end of 2019. Thereafter, it modestly recovers to near 0.75 to 0.93 in 2020 and early 2021, before declining again in subsequent periods. From 2021 through mid-2025, the quick ratio predominantly remains between 0.4 and 0.6. This pattern suggests increased reliance on less liquid current assets and a more constrained quick asset base.

Cash Ratio

The cash ratio shows the lowest levels among the liquidity ratios, indicating limited cash and cash equivalents relative to current liabilities. Starting near 0.92 at the end of 2018, it declines sharply to approximately 0.36 by late 2019. A moderate recovery occurs during 2020 and early 2021, with the ratio rising to about 0.81. Following this, there is a gradual downward trend through 2022 to mid-2025, fluctuating around 0.3 to 0.4. This consistent level of cash coverage suggests a cautious liquidity position, with cash resources sufficient to cover only a fraction of short-term liabilities.

Overall Insights

Across all three liquidity ratios, a pattern of initial decline through 2019 is evident, followed by partial recovery into 2020 and early 2021. Subsequently, there is a gradual weakening tendency throughout the later periods up to mid-2025. The ratios generally remain below 1.0, indicating a potential liquidity risk characterized by current liabilities surpassing current assets, especially in highly liquid forms. This trend points to the importance of ongoing liquidity management and monitoring of working capital components to maintain operational flexibility and meet short-term obligations.

The analysis of the quarterly financial data reveals several key trends in liquidity and financial health over the observed periods.

Current Assets

Current assets exhibit fluctuations with an overall tendency toward stabilization and growth in the later periods. Initial quarters show significant variability, with values ranging from approximately 4,952,300 to 7,836,500 thousand US dollars. After a period of volatility around mid-2020, current assets increase to levels consistently above 7 million thousand US dollars, peaking notably at 8,421,500 thousand US dollars by the end of the latest quarter.

Current Liabilities

Current liabilities generally trend upwards over the periods analyzed. Starting around 5,427,500 thousand US dollars, liabilities rise with occasional declines but resume an increasing trajectory in the last quarters, reaching over 11 million thousand US dollars. This indicates growing short-term obligations, which could affect liquidity if not matched by current assets.

Current Ratio

The current ratio demonstrates a declining trend with intermittent recoveries. Early in the series, this ratio was above 1.4 but dropped sharply to below 1.0 in several periods, indicating periods where current liabilities exceeded current assets. Despite some temporary improvements above 1.0, the ratio mostly remains below the critical threshold of 1.0, ending around 0.76 in the most recent quarter. This suggests a weakening liquidity position overall, signaling potential difficulty in meeting short-term obligations without liquidating long-term assets or obtaining additional financing.

In summary, while current assets have shown some recovery and growth in the final quarters, the parallel increase in current liabilities and a generally low current ratio point to a cautious liquidity outlook. Maintaining or improving liquidity ratios will be crucial to ensure the company can meet its short-term liabilities comfortably moving forward.

Total Quick Assets

The total quick assets exhibit significant volatility over the observed periods. Initially, the value starts at 5,713,200 thousand USD at the end of 2018 and experiences a sharp decline in early 2019, reaching a low of 2,835,300 thousand USD by March 31, 2019. Subsequently, it recovers briefly and fluctuates throughout 2019 and 2020, displaying peaks near 6,151,600 thousand USD in late 2020. The period from 2021 to 2022 shows a downward trend, declining from 7,557,900 thousand USD in October 2021 to 4,358,400 thousand USD by October 2022. From late 2022 through mid-2025, the total quick assets continue to oscillate, generally remaining below the earlier peaks and ending at 5,748,500 thousand USD by June 29, 2025.

Current Liabilities

Current liabilities generally increase over the entire timeframe from 5,427,500 thousand USD at the end of 2018 to 11,142,300 thousand USD by June 29, 2025. There are fluctuating intervals, such as a rise in 2019, a slight reduction during early 2021, followed by an accelerated increase from late 2022 through 2025, indicating a growing short-term debt or obligations. This upward trajectory suggests increasing pressure on liquidity management.

Quick Ratio

The quick ratio starts slightly above parity at 1.05 in December 2018 but quickly declines below 1.0 by March 2019, reaching lows near 0.4 to 0.5 in various quarters thereafter. The ratio exhibits cyclical patterns with temporary improvements, such as a peak at 0.93 in October 2021, but generally remains below 1.0 for most periods, indicating that quick assets fall short of covering current liabilities consistently. Towards the latest periods, the ratio stabilizes but remains low, fluctuating between 0.40 and 0.59 through mid-2025.

Overall Analysis

The data reflect a volatile liquidity position with total quick assets experiencing wide fluctuations and current liabilities steadily increasing. The persistent quick ratio below 1.0 indicates potential liquidity constraints, as quick assets are insufficient to cover immediate obligations without relying on inventory or other less liquid items. The upward trend in liabilities combined with fluctuating quick assets warrants close monitoring of short-term financial health and may necessitate strategic action to enhance liquidity reserves and manage obligations effectively.

Total Cash Assets

The total cash assets exhibit a fluctuating pattern over the quarters. Initially, there was a decline from 4,991,800 thousand USD at the end of 2018 to 2,131,700 thousand USD in the first quarter of 2019. Following this decline, a recovery phase is observed with peaks reaching 6,617,900 thousand USD in the third quarter of 2021. Subsequently, cash assets trend downward again, generally stabilizing between approximately 3.0 and 4.0 million thousand USD in the most recent quarters. This suggests episodes of cash accumulation followed by periods of utilization or investment.

Current Liabilities

Current liabilities display an overall upward trend throughout the period. Starting from 5,427,500 thousand USD at the end of 2018, there is a general increase with some variability, culminating in a significant rise to 11,142,300 thousand USD by the second quarter of 2025. The upward trajectory indicates growing obligations in the short term, nearly doubling over the observed timeframe.

Cash Ratio

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, follows a variable but generally declining trend. It starts at 0.92 at the end of 2018, indicating strong liquidity, then decreases sharply to as low as 0.29 around the first quarter of 2025. While intermittent recoveries occur, the ratio remains under 0.5 for most of the later periods. This decline reflects a proportionally faster growth in current liabilities relative to cash assets, suggesting reduced immediate liquidity coverage.

Overall Observations

The financial data reveals a pattern of oscillating cash reserves paired with steadily increasing current liabilities. Despite occasional improvements in cash assets, the rising liabilities have exerted downward pressure on liquidity ratios over time. The decreasing cash ratio implies heightened risk in meeting short-term obligations solely with cash or cash-equivalents, which may necessitate attention to liquidity management strategies going forward.