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    Recent Changes in the Capital Structure of Starbucks

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    Please discuss the capital structure and the cost of capital of Starbucks. Has their capital structure or cost of capital changed much over the past two years? If yes, explain the reasons for the change.

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    When we say capital structure, it is in reference to the mix of debt and equity that finances a company's entire asset base. On page 45 of Starbucks Corporation's (NasdaqGS: SBUX) Annual Report for the fiscal year, which ended September 29th, 2013, we can see that the specialty eateries company is valued at about US $7,034 million in total liabilities and at US $4,482 million in total equity financing for its US $11,516 asset base. This means that Starbucks's liabilities is 61% of total assets, while equity is about 39% for the fiscal year that ended on September 29th, 2013.

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    Solution Summary

    This 350-word solution defines capital structure in general and for Starbucks specifically, as well as explaining recent developments that have impacted the capital structure of Starbucks and how this may impact the company moving forward.