Starbucks Corporations Cash Flow Analysis

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Starbucks has extremely positive financials through 2020. The companys revenue grew annually until 2020, while the gross margin also increased while the cost of goods sold remained at the same level (Starbucks Corporation, 2021). This fact signals that the company is very competent in dealing with production resources, constantly finding an opportunity to save money without harming its quality and revenue growth. Nevertheless, the companys operating expenses are growing in proportion to its revenue, which can be said about operating income and net income. The companys operating cash flow dropped significantly by the pandemic but returned to 2019 in 2021 (Starbucks Corporation, 2021). Profits from the direct activities of the company were naturally suspended due to the restrictions imposed around the world, many coffee shops had to be closed, and the company did not develop the home delivery system to the required extent.

The cash flow from financial activity in 2019 was shallow, going strongly into negative values. Since 2019, judging by the significantly increased indicator of total liabilities, the company received a large loan, increasing its debt (Starbucks Corporation, 2021). The indicators showed big jumps just against the backdrop of financial injections and the crisis in a pandemic. Starbucks buys long-term assets in roughly equal amounts every year based on negative investment cash flow. Compared to its competitors Dunkin Donuts and McDonalds, Starbucks has better investment cash flow indicators, which speaks to the effectiveness of their long-term strategy. Nevertheless, Dunkin Donuts reacted better to the pandemic, maintaining the growth rate of cash flow from operating activities, and McDonalds in this indicator has exceptionally high values that have not fallen for many years (JM Smucker Cash Flow Statement 2005-2021 | SJM, 2021, McDonalds Cash Flow Statement 2005-2021 | MCD, 2021). Free cash flow reflects both the short-term and long-term capabilities of the company, increasing the need for increased working capital. The calculations are presented in Table 1.

Table 1. Free Cash Flow Calculations.

	2021	2020
Cash Flow from Operations	4872.1 billion	1561.7 billion
Interest Expense	469.8	437.0
Tax Rate	21.6%	20.6%
Capital Expenditures (CAPEX)	1.5 billion	1.5 billion
Free Cash Flow (FFCF)	5238.30	1907.17