Starbucks Financial Statement and Financial Ratios Analysis

Starbucks Financial Statements and Financial Ratios Analyzed

Hey All,

Thanks for visiting my Starbucks Financial Report page. On this page, you will find preliminary information about Starbucks' financial performance and some historical track records and trends. 

I offer two reports for a more detailed examination of Starbucks' financial performance: "A Beginner's Guide to Starbucks Financial Analysis" and "Starbucks Financial Report with AI Insights by Paul Borosky, MBA."  Both reports are written by myself, Paul Borosky, MBA., Doctoral Candidate and published author, and include:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Five years’ worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line-by-line description, explanation, and analysis tip for most financial statement line items and financial ratios.
  • Professional financial analysis tips are provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is where I use plain English to explain concepts.

 

For a MORE in-depth review of the company's financial statements and ratios, buy my "Starbucks Financial Report."  The financial report includes all aspects of my "Beginner's Guide" plus much more...

  • Professional financial analysis using AI of important income statements, balance sheets, and financial ratio trends.
  • "Letter Grade" is assigned to most financial statement line items and financial ratios to help you better understand their overall trends for the last 5 years.
  • Overall financial analysis summary for the company.

Enjoy the preliminary information, and for a more detailed analysis, buy the financial report!

Sincerely,

Paul, MBA.

PDF/Downloadable Version

Starbucks Beginner's Guide to Financial Analysis by Paul Borosky, MBA.

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Starbucks 2022 Financial Analysis and Report by Paul Borosky, MBA.

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Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

Starbucks Company Summary

Starbucks Corporation, founded in 1971 in Seattle, Washington, has evolved into one of the world's most recognizable and influential coffeehouse chains. Known for its premium coffee, inviting ambiance, and global presence, Starbucks has made a significant mark on coffee culture and the retail industry.

Starbucks' success is built on several key factors. Firstly, it prioritizes quality and sources high-quality coffee beans from around the world, which are expertly roasted and brewed to perfection. The company's commitment to ethical sourcing through programs like C.A.F.E. Practices promotes sustainable and responsible coffee production. Starbucks has created a unique and inviting café experience. Its stores provide a welcoming atmosphere for customers to enjoy coffee, a variety of food and beverages, and free Wi-Fi, making them popular gathering spots.

Starbucks has also embraced technology, pioneering mobile ordering and payment options, loyalty programs, and digital innovations to enhance the customer experience and drive sales. Furthermore, Starbucks has expanded globally, with thousands of stores in numerous countries, symbolizing globalization and American coffee culture. Its diverse menu offerings cater to various tastes and dietary preferences, further broadening its appeal. Starbucks is strongly committed to social responsibility, focusing on sustainability, diversity, and community engagement. Its efforts include reducing environmental impact, supporting coffee farmers, and promoting inclusivity.

In conclusion, Starbucks is not just a coffee company but a cultural phenomenon, offering quality coffee, a unique café experience, and a global presence while embracing innovation and social responsibility (10/23).

Starbucks Financial Report Sources

"Starbucks 2022 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years with AI Insights” was written by Paul Borosky, MBA., doctoral candidate and owner of Quality Business Plan.  In this summarized book, the author researched Starbucks 10k, Starbucks 2017 10k annual report, Starbucks 2021 10k annual report, Starbucks 2020 10k annual report, and Starbucks 2019 10k annual report as the basis for information gathering.  Once all Starbucks 10k annual statements were collected, the author inserted Starbucks's income statement information and balance sheet information into a customized financial template. 

Section 1: Starbucks’s Income Statement – Summary Analysis

In this section, I walk through a broad definition of what an income statement is and why it is essential.  I then discuss and define income statement line items, such as revenues, gross profits, etc., in detail.  After each line item is defined and discussed, I finally summarize Starbucks ' significant income statement line item trends.

Starbucks 2022 Summary Income Statement

Column1 2022 2021 2020 2019 2018
Revenues

                   32,250

                   29,060                    23,518                    26,508                      24,720
COGS                    10,317                      8,738                      7,694                      8,527                      10,175
Gross Profit                    21,933                    20,322                    15,824                    17,981                      14,545
 
SG&A                      2,032                      1,932                      1,679                      1,824                        1,759
Depreciation                      1,447                      1,441                      1,431                      1,377                        1,247
R & D                            -                            -                            -                            -                           224
Other                            -                            -                            -                            -                             -
Total Operating Expenses                    27,866                    24,573                    22,278                    22,728                      21,137
EBIT                      4,617                      4,872                      1,561                      4,077                        3,883
Other Income                            -                            -                            -                            -                           191
Interest Expense                         483                         469                         437                         331                           170
EBT                      4,232                      5,356                      1,164                      4,466                        5,780
Taxes                         948                      1,156                         239                         872                        1,262
Net Income                     3,282                     4,199                        928                     3,599

                     4,518

Revenue Growth

Starbucks has shown a solid increase in revenues over the last five years, with total revenues rising from $24,720 million in 2018 to $32,250 million in 2022. Despite a significant dip in 2020, where revenue growth was -11.3%, possibly due to the impact of the COVID-19 pandemic, the company rebounded strongly with a 23.6% growth in 2021. The year 2022 maintained this upward trend with an 11.0% growth. The average revenue growth rate from 2018 to 2022 is 7.6%, indicating a healthy growth trajectory. The recovery from the 2020 decline suggests effective strategic measures were taken to counteract the adverse effects of the pandemic on the business.

Analyst Grade: A

Importance of Starbucks Financial Ratios for Financial Analysis

For several reasons, income statement analysis is integral to Starbucks' financial analysis. The income statement, also known as the profit and loss statement, concisely summarizes the company's revenues, expenses, and profitability over a specific period, typically a quarter or a year.

Analyzing Starbucks' income statement allows for a thorough assessment of the company's financial performance. It provides insights into the coffee giant's ability to generate revenue, control costs, and ultimately achieve profitability. Analysts can evaluate operational efficiency and effectiveness by examining net income, gross profit, and operating expenses.

Additionally, the income statement helps identify trends and patterns in Starbucks' financial performance, offering valuable information about shifts in consumer behavior and market dynamics.

Furthermore, this analysis aids in comparing Starbucks' performance with industry peers and historical data, facilitating a comprehensive assessment of its competitive position. By evaluating metrics like gross profit margin and net profit margin, analysts can gauge profitability relative to industry standards.

In conclusion, income statement analysis is indispensable for understanding Starbucks' financial health, profitability, and competitive standing. It forms a cornerstone of financial analysis, guiding informed decision-making and providing insights crucial for the coffee giant's continued success in the highly competitive coffee and retail industry.

Section 2: Starbucks Balance Sheet – Summary Analysis

For Starbuck's balance sheet, I again go through each vital line item from the balance sheet.  In reviewing each line item, I will define Starbucks ' balance sheet line items, such as cash, property, plant and equipment, and liabilities.  Next, I will offer a summary analysis of Starbucks ' essential balance sheet line items using AI.

Starbucks 2022 Summary Balance Sheet

Column1 2022 2021 2020 2019 2018
Cash                        2,818                    6,455                    4,350                    2,686                    8,756
Short Term Investment                           364                       162                       281                         71                       182
Account Receivable                        1,175                       940                       883                       879                       693
Inventory                        2,177                    1,603                    1,151                    1,529                    1,401
Other
Current Assets                       7,019                  9,756                  7,806                  5,653                12,494
Net PPE                        6,560                    6,369                    6,241                    6,431                    5,929
Goodwill                        3,283                    3,677                    3,597                    3,490                    3,542
Other
Total Assets                    27,978                31,392                29,374                19,220                24,156
Accounts Payable                        1,441                    1,211                       997                    1,189                    1,179
Accrued Expense                           761                    2,745                    1,856                    2,418                    2,298
Accrued Taxes                        2,137                       348                         98                    1,292                       103
Notes Payable                           175                         -                       438                         -                         -
LT Debt - Current                        1,749                       998                    1,249                         -                       350
Other                         -                         -                         -                         -
Total Current Liabilities                        9,152                    8,151                    7,346                    6,169                    5,684
LT Debt                      13,120                  13,616                  14,659                  11,167                    9,090
Other
Total Liabilities                    36,671                36,707                37,173                25,451                22,981
Common Stock                           205                       847                       374                         41                         42
Treasury                         -                         -
Retained Earnings                      (8,450)                  (6,315)                  (7,815)                  (5,771)                    1,457
Other                         -
Total Equity                       8,699                 (5,314)                 (7,805)                 (6,232)                  1,176
Total Equity & Liability                    27,978                31,392                29,374                19,220                24,156

Cash: 

Starbucks' cash as a percentage of sales has seen significant variation over the five years, with the highest percentage recorded in 2018 at 35.4% and the lowest in 2022 at 8.7%. The data shows a notable decrease in cash relative to sales in 2022, possibly indicating increased investment or a reduction in liquid assets. Conversely, 2021 had an exceptionally high cash percentage at 22.2%, which could reflect conservative cash management during uncertain economic times due to the pandemic. Cash as a percentage of total assets also decreased from 36.2% in 2018 to 10.1% in 2022, suggesting a shift in the company's asset allocation or an increase in non-cash assets. These trends could indicate Starbucks' strategic moves, possibly towards expansion or paying off liabilities, impacting liquidity.

Analyst Grade: B+

Importance of Starbucks's Balance Sheet for Financial Analysis

Balance sheet analysis is a fundamental aspect of Starbucks' financial analysis, playing a pivotal role in assessing the company's fiscal health and overall financial position. The balance sheet, also known as the statement of financial position, offers a snapshot of Starbucks' assets, liabilities, and shareholders' equity at a specific time.

Analyzing Starbucks' balance sheet is crucial for understanding its liquidity, solvency, and capital structure. It enables financial analysts to evaluate the company's ability to meet its short-term obligations and overall financial stability by examining the composition of assets and liabilities.

Furthermore, the balance sheet reveals insights into Starbucks' funding sources, highlighting the proportion of debt and equity financing. This information is essential for assessing the company's risk profile and its capacity to sustain its operations in the long term.

Moreover, changes in the balance sheet over time can indicate trends in Starbucks' financial health, such as increasing or decreasing debt levels or shifts in asset composition.

In conclusion, balance sheet analysis is vital to Starbucks' financial analysis toolkit. It provides essential insights into the company's financial strength, risk exposure, and ability to successfully navigate the dynamic coffee and retail industry.

Section 3: Starbucks Financial Ratio Summary

For this section, I have chosen several different financial ratios to review for Starbucks Inc.  In reviewing each of Starbucks ' financial ratios, I first define the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Starbucks ' critical financial ratios using AI. 

Starbucks Current Ratio

Starbucks' current ratio, a measure of liquidity, has notably decreased from a strong position of 2.20 in 2018 to a concerning 0.77 in 2022. This downward trend, notably the dip below 1.0 in 2022, indicates that the company's current assets are insufficient to cover its current liabilities, which could signal potential liquidity constraints. The ratio saw a temporary improvement in 2021, reaching 1.20, likely due to an increase in current assets or a decrease in current liabilities. The current ratio's movement reflects changes in Starbucks' working capital management and its ability to meet short-term obligations. It's important to note that while a current ratio below 1 is often seen as a risk, the significance varies by industry and company-specific circumstances.

Analyst Grade: B-

Starbucks' Total Asset Turnover

Starbucks' total asset turnover ratio, a measure of the company's efficiency in using its assets to generate sales, has varied, with the highest efficiency seen in 2019 at 1.38 and the lowest in 2020 at 0.80. The increase to 1.15 in 2022 from 0.93 in 2021 suggests an improved utilization of assets to generate revenue. This improvement could indicate a recovery from the pandemic's impact or a successful implementation of strategies to enhance operational efficiency. The fluctuation over the years can also reflect changes in the company's total asset base or sales strategies. Generally, a higher asset turnover ratio is preferable as it implies that the company generates more revenue per dollar of assets.

Analyst Grade: B

Importance of Starbucks's Financial Ratios for Financial Analysis

Financial ratio analysis is a cornerstone of Starbucks' financial analysis, holding significant importance for assessing the company's financial health and performance. These ratios distill complex financial data into meaningful metrics that offer valuable insights into Starbucks' operations and fiscal well-being.

Financial ratios enable analysts to gauge Starbucks' profitability, efficiency, liquidity, and solvency. Metrics like return on assets (ROA), return on equity (ROE), and gross profit margin provide insights into how effectively Starbucks generates profits and manages resources.

Additionally, these ratios aid in benchmarking Starbucks against industry peers and historical data, offering context and revealing trends. Analysts can identify relative strengths and areas for improvement by comparing performance metrics.

Furthermore, financial ratios assist in making investment decisions by assessing Starbucks' risk profile and ability to meet short-term and long-term obligations. Ratios like the debt-to-equity and interest coverage ratios offer insights into Starbucks' financial stability.

In conclusion, financial ratio analysis is an indispensable tool for investors, analysts, and stakeholders. It guides informed decision-making, assesses Starbucks' financial well-being, and helps understand its competitive position in the ever-evolving coffee and retail industry.