Starbucks Corp. (NASDAQ:SBUX)

The solvency position, as indicated by the provided ratios, exhibits a generally stable pattern over the analyzed period, spanning from December 2020 to June 2025. While fluctuations exist, no dramatic shifts in the company’s long-term financial leverage are apparent. A closer examination of individual ratios reveals nuanced trends.

Debt to Capital

The Debt to Capital ratio demonstrates initial increases from 1.99 in December 2020 to a peak of 2.39 in September 2022. Subsequently, a gradual decline is observed, reaching 1.92 in September 2024 before a slight increase to 2.09 in September 2025. This suggests a period of increased reliance on debt financing followed by a strategic reduction in leverage, with a recent minor uptick. The inclusion of operating lease liability shows a similar pattern, but at lower levels, ranging from 1.41 to 1.58, indicating that operating leases contribute significantly to overall debt obligations but do not fundamentally alter the observed trend.

Debt to Assets

The Debt to Assets ratio generally remains within a narrow band, fluctuating between 0.47 and 0.55. A slight upward trend is visible in the earlier part of the period, peaking at 0.55 in April 2022, followed by relative stability. Including operating lease liabilities elevates this ratio to between 0.75 and 0.86, highlighting the substantial impact of these obligations on the company’s asset base. The ratio shows a slight decrease towards the end of the period, suggesting a potential improvement in the proportion of assets financed by equity.

Interest Coverage

The Interest Coverage ratio exhibits a significant improvement from 2.78 in December 2020 to a high of 13.08 in January 2022. This indicates a substantial increase in the company’s ability to meet its interest obligations from earnings. However, a subsequent decline is observed, falling to 5.06 in September 2025. This decrease, while still representing a positive coverage ratio, warrants attention as it suggests a potential weakening in the company’s capacity to service its debt. The decline is relatively consistent over the latter portion of the analyzed period.

Overall, the company demonstrates a moderate level of financial leverage. The observed trends suggest a period of strategic debt management, with initial increases in borrowing followed by a gradual reduction. The declining interest coverage ratio, however, signals a potential area of concern that may require further investigation. The inclusion of operating lease liabilities consistently increases the reported debt ratios, emphasizing the importance of considering these obligations when assessing the company’s solvency.

The solvency position, as indicated by the debt to equity ratio, exhibits considerable fluctuation over the analyzed period. Initially, the shareholders’ deficit is negative, and the debt to equity ratio is not calculable. As the shareholders’ deficit decreases and eventually becomes positive, the debt to equity ratio becomes meaningful and demonstrates a notable trend.

Initial Period (Dec 27, 2020 – Oct 1, 2022)

From December 2020 through October 2022, total debt generally remained relatively stable, fluctuating between approximately US$14.6 billion and US$16.0 billion. Simultaneously, the shareholders’ deficit diminished, moving from -US$7.9 billion to -US$8.7 billion. This reduction in the deficit, while remaining negative, resulted in an increasing debt to equity ratio, though the ratio remains undefined for much of this period due to the negative equity. By October 2022, the shareholders’ deficit was approaching a point where the ratio could be meaningfully calculated.

Transition and Stabilization (Jan 1, 2023 – Jun 30, 2024)

The shareholders’ deficit transitioned to a positive value in early 2023, allowing for the calculation of the debt to equity ratio. From January 2023 to June 2024, the ratio experienced a period of volatility, initially increasing from approximately 1.79 to 2.11, then decreasing to 1.98. Total debt remained relatively consistent, fluctuating around US$15.4 billion, while the shareholders’ equity increased, contributing to the ratio’s fluctuations.

Recent Trend (Sep 29, 2024 – Jun 29, 2025)

A significant increase in the debt to equity ratio is observed in the most recent period. From September 2024 to June 2025, the ratio rose from 1.97 to 2.24. This increase is primarily driven by a substantial rise in total debt, which increased from US$15.56 billion to US$17.32 billion, while shareholders’ equity experienced a moderate decrease. This suggests a greater reliance on debt financing in recent quarters.

Overall, the debt to equity ratio demonstrates a shift from an initially undefined position due to negative equity to a fluctuating ratio that has recently shown an upward trend. The increase in the ratio in the latest reporting periods warrants further investigation to understand the underlying reasons for the increased debt levels and their potential impact on the company’s financial risk.

The Debt-to-Equity ratio, incorporating operating lease liabilities, exhibits a fluctuating pattern over the analyzed period. Initially, the ratio is not calculable due to a negative shareholders’ deficit. As the deficit decreases, the ratio becomes increasingly meaningful, revealing a generally increasing trend in leverage over the observed timeframe.

Shareholders’ Deficit Trend

The shareholders’ deficit consistently decreased from December 2020 through October 2021, moving from -7,909,700 to -5,321,200. However, it then increased again, reaching -8,457,200 by January 2022. This pattern of decrease followed by increase continues throughout the period, with the deficit reaching -8,388,700 by December 2025. The fluctuations in the deficit significantly impact the Debt-to-Equity ratio’s interpretation.

Total Debt Trend

Total debt, including operating lease liabilities, generally increased over the period, starting at 24,938,200 in December 2020 and rising to 27,886,100 in June 2025, before decreasing to 25,470,900 in December 2025. There are some quarterly decreases, such as between October 2022 and January 2023, but the overall trajectory is upward. The increase in debt contributes to the observed increase in the Debt-to-Equity ratio.

Debt-to-Equity Ratio Calculation & Interpretation

Due to the initial negative shareholders’ deficit, the Debt-to-Equity ratio is not meaningful in the earlier periods. As the deficit diminishes, the ratio becomes calculable. From April 2022 onwards, the ratio demonstrates a clear upward trend, indicating increasing financial leverage. The ratio increases from a value of approximately 2.84 in April 2022 to approximately 3.52 in June 2025, before decreasing to approximately 3.18 in December 2025. This suggests the company is relying more on debt financing relative to equity over time, although the most recent period shows a slight decrease in leverage.

The interplay between the fluctuating shareholders’ deficit and the generally increasing total debt results in a Debt-to-Equity ratio that is initially unstable but becomes progressively more indicative of increasing leverage. The recent decrease in the ratio in the final observed period warrants further investigation to determine if this represents a shift in financing strategy or a temporary fluctuation.

The debt to capital ratio for the analyzed period demonstrates fluctuations, generally remaining above 1.5. An initial increase is observed, followed by a period of decline, and then a subsequent rise towards the end of the analyzed timeframe.

Initial Trend (Dec 27, 2020 – Oct 2, 2022)

The ratio began at 1.99 and increased to a peak of 2.09 in March 2021. Subsequently, a downward trend was evident, decreasing to 1.57 by October 2021. This decline continued, albeit at a slower pace, reaching 2.37 by October 2022. This period suggests an initial increase in leverage followed by a period where capital growth outpaced debt accumulation, then a return to increasing debt relative to capital.

Mid-Period Fluctuations (Jan 1, 2023 – Jun 30, 2024)

From January 2023 to June 2024, the ratio exhibited volatility. It decreased from 2.39 to 2.18, then further to 2.04, and finally to 1.92. This suggests a period of active debt management or capital increases that temporarily lowered the ratio. However, the ratio then increased to 2.04 by June 2024.

Recent Trend (Sep 29, 2024 – Jun 29, 2025)

The ratio experienced a slight decrease to 1.92 in September 2024, followed by a rise to 1.96 in December 2024. A more significant increase was observed in June 2025, reaching 1.80, before increasing again to 2.01 and 2.09. This recent upward trend indicates a renewed reliance on debt financing or slower growth in capital relative to debt.

Overall Observations

Throughout the analyzed period, the debt to capital ratio consistently remained above 1.5, indicating that debt financing represents a significant portion of the company’s capital structure. The fluctuations suggest active management of debt and capital, potentially in response to market conditions or internal investment strategies. The recent increase warrants further investigation to determine the underlying drivers and potential implications for the company’s financial risk profile.

The Debt to Capital ratio, including operating lease liability, for the analyzed period demonstrates fluctuations while generally remaining within a relatively narrow range. An initial increase is observed, followed by a period of decline, and then a subsequent rise towards the end of the observed timeframe.

Initial Trend (Dec 2020 - Oct 2021)

The ratio begins at 1.46 in December 2020 and increases to 1.48 in March 2021. A slight decrease is then noted, falling to 1.29 by October 2021. This initial period suggests a modest increase in leverage followed by a slight deleveraging.

Fluctuation and Increase (Jan 2022 - Jun 2024)

From January 2022, the ratio experiences volatility, peaking at 1.55 before declining and then stabilizing around the 1.46-1.54 range through June 2024. This period indicates inconsistent changes in the company’s capital structure, with no clear directional trend.

Recent Trend (Jul 2024 - Jun 2025)

A noticeable upward trend emerges from July 2024, with the ratio increasing from 1.41 to 1.38, then peaking at 1.44 in June 2025. This suggests a recent increase in reliance on debt financing relative to capital. The ratio reaches a high of 1.38 in December 2024, and then increases to 1.44 in June 2025. The ratio then decreases to 1.49 in September 2025, and then decreases to 1.49 in December 2025.

Overall Observations

Throughout the analyzed period, the Debt to Capital ratio remains above 1.0, indicating that debt financing consistently represents a larger portion of the company’s capital structure than equity. The most recent increase warrants monitoring to assess potential implications for financial risk. The ratio generally fluctuates between 1.29 and 1.58, suggesting a moderate level of financial leverage.

The variations in the ratio likely reflect changes in debt levels, equity issuance or repurchase, and the impact of operating lease liabilities. Further investigation into the underlying drivers of these changes would provide a more comprehensive understanding of the company’s financial position.

The debt-to-assets ratio for the analyzed period demonstrates a generally stable pattern with moderate fluctuations. Initially, the ratio exhibited a slight decline from 0.53 in December 2020 to 0.47 in October 2021. Subsequently, it experienced a period of relative stability, hovering around the 0.53 to 0.55 range through April 2022. A minor decrease was observed in the latter half of 2022, reaching 0.51 by December 2022, before stabilizing again in the first half of 2023. A notable increase occurred in the latter half of 2024, peaking at 0.51 in December 2024, followed by a further increase to 0.51 in June 2025. The ratio concludes the analyzed period at 0.50 in September 2025 and 0.50 in December 2025.

Overall Trend

The overall trend indicates a relatively consistent level of financial leverage. While fluctuations exist, the ratio remains within a narrow band, suggesting a stable capital structure. The recent increase in the ratio warrants monitoring, but does not, in isolation, indicate a significant shift in risk profile.

Short-Term Fluctuations

The decrease observed between December 2020 and October 2021 could be attributed to asset growth outpacing debt accumulation, or a deliberate reduction in debt. The subsequent stabilization and minor fluctuations likely reflect ongoing operational financing and investment activities. The increase in the ratio during late 2024 and early 2025 suggests either an increase in debt or a decrease in assets, or a combination of both.

Ratio Range

The ratio consistently remained above 0.45 throughout the analyzed period. This suggests that debt consistently represents a substantial portion of the company’s assets. A ratio above 0.5 indicates that more than half of the company’s assets are financed by debt, which is a moderate level of leverage.

Recent Developments

The most recent quarterly values show a slight decrease in the ratio, stabilizing around 0.50. This could indicate a potential shift towards a more balanced capital structure, or simply a temporary fluctuation. Continued monitoring is necessary to determine the sustainability of this trend.

The debt-to-assets ratio, including operating lease liabilities, for the analyzed period demonstrates relative stability with some fluctuation. Overall, the ratio remains within a fairly narrow range, indicating a consistent, though not dramatically changing, level of financial leverage.

Initial Period (Dec 2020 - Oct 2021)

The ratio begins at 0.83 and generally decreases, reaching a low of 0.75 in October 2021. This suggests a period where asset growth outpaced debt accumulation, or debt was actively reduced. The decrease, while present, is not substantial.

Fluctuation and Subsequent Increase (Jan 2022 - Jun 2025)

Following October 2021, the ratio experiences fluctuations, initially rising to 0.86 in January 2022, then decreasing again before stabilizing around 0.82-0.84 through the end of 2023. A noticeable increase is observed in the first quarter of 2025, peaking at 0.83, followed by a decrease to 0.79 in September 2025, and a final increase to 0.83 in December 2025. This suggests periods of increased borrowing or slower asset growth, followed by periods of asset growth or debt repayment.

Long-Term Trend

Despite the quarterly variations, the ratio remains relatively consistent over the entire analyzed period. It begins and ends around 0.83, indicating that the company’s overall financial leverage, as measured by this ratio, has not undergone a significant shift. The highest value recorded is 0.86, and the lowest is 0.75, representing a range of 0.11.

The observed patterns suggest a managed approach to debt levels, with adjustments made in response to operational and financial conditions. The consistency of the ratio implies a deliberate strategy regarding the use of debt financing.

The information presents a series of quarterly observations regarding total assets, shareholders’ deficit, and financial leverage. A notable pattern emerges concerning the shareholders’ deficit, which consistently registers as a negative value throughout the observed period, indicating a situation where liabilities exceed assets. The magnitude of this deficit fluctuates over time, but remains a persistent feature of the company’s financial structure.

Total Assets

Total assets exhibit a generally stable pattern, with values ranging between approximately US$27.9 billion and US$31.9 billion. There is an initial decrease from December 2020 to March 2021, followed by a period of growth through October 2021. Subsequent quarters show some fluctuation, but a clear upward trend is observed from October 2022 through September 2025, culminating in a peak of US$33.6 billion. A slight decrease is then noted in the final observation period.

Shareholders’ Deficit

The shareholders’ deficit demonstrates a decreasing trend from December 2020 to June 2021, moving from approximately -US$7.9 billion to -US$6.8 billion. However, this trend reverses, with the deficit increasing to -US$8.8 billion by October 2022. From October 2022 through December 2023, the deficit fluctuates, but remains consistently negative and substantial. A decreasing trend is then observed from January 2024 through September 2025, reaching -US$8.1 billion, before increasing again to -US$8.4 billion in the final period.

Financial Leverage

The financial leverage ratio is not populated with values. Without this information, a comprehensive assessment of the company’s financial risk and capital structure is limited. The absence of this ratio prevents a direct evaluation of the relationship between debt and equity, and the extent to which the company relies on borrowed funds.

The consistent negative shareholders’ deficit warrants attention, as it suggests potential financial vulnerability. The upward trend in total assets, particularly in the later periods, could indicate growth or investment, but its impact is tempered by the persistent deficit. The lack of financial leverage data hinders a complete understanding of the company’s financial health and risk profile.

The interest coverage ratio exhibits considerable fluctuation over the analyzed period, generally indicating a strong ability to meet interest obligations, though with a noticeable decline in the most recent quarters. Initial values demonstrate a reasonable, though modest, coverage, which strengthens significantly before experiencing a recent downward trend.

Overall Trend

From December 2020 through September 2023, the interest coverage ratio generally increased, peaking at 12.40. However, beginning with the October 2023 observation, a consistent decline is evident, falling to 5.06 by March 2025. This suggests a weakening capacity to cover interest expenses with earnings before interest and taxes.

Initial Period (Dec 2020 – Jun 2021)

The ratio began at 2.78 in December 2020 and improved substantially to 8.49 by June 2021. This improvement coincided with a significant increase in Earnings Before Interest and Tax (EBIT), indicating improved operational profitability and a greater margin of safety for covering interest payments.

Peak Performance (Jul 2021 – Oct 2022)

The period from July 2021 to October 2022 represents a period of strong interest coverage, with ratios consistently above 9.76. This suggests a robust financial position and a comfortable ability to service debt obligations. While EBIT fluctuated, it remained sufficiently high to maintain a strong coverage ratio.

Recent Decline (Oct 2023 – Sep 2025)

A clear downward trend emerges from October 2023 onwards. The ratio decreased from 11.07 to 5.06 over the final seven quarters. This decline appears to be driven by a combination of decreasing EBIT and increasing interest expense. The most significant drop occurs between June 2025 and September 2025, where the ratio falls from 7.59 to 5.06. This recent deterioration warrants further investigation to understand the underlying causes and potential implications for financial stability.

Interest Expense

Interest expense demonstrated a gradual increase throughout the period, rising from US$120,700 in thousands to US$145,800 in thousands. While not dramatic, this consistent increase contributes to the observed decline in the interest coverage ratio, particularly when coupled with the recent decrease in EBIT.

In conclusion, while the company historically maintained a strong interest coverage position, recent trends indicate a weakening ability to comfortably cover interest expenses. The observed decline necessitates monitoring and analysis of the factors contributing to reduced profitability and increased debt servicing costs.