The following report details the background and financial position, in regards to receiving credit, of Starbucks Corporation and Caribou Coffee. Starbucks is the largest roaster and retailer of specialty coffee in the world while Caribou is the second largest premium coffeehouse operator in the United States. Both companies offer their coffee product in licensed retail stores and in other commercial segments including grocery stores. Each company has branched out from just coffee by adding items like bottled drinks, teas, espressos and cappuccinos and a line of baked goods to their menus. Each company faces similar risks inherent to the coffee industry. These risks include fluctuating coffee bean prices, the U.S. economy and various foreign economies. Additional risks to Caribou include the inability to circumvent changes in interest rates or the price of supplies and charter provisions which may prevent or delay changes in management. Despite increasing current ratios, both companies are increasing liquidity risk by not having a standard 2:1 ratio. Caribou looks to have more liquidity based on cash to current assets and cash to current liability ratios but has seen a rise in days’ sales in receivables. Caribou also converts inventory to cash quicker than Starbucks. However, Starbucks is able to pay back obligations 3 days faster than Caribou. Though Caribou appears to be more liquid, there is a large gap in working capital which needs to be noted. Based on cash flow ratio, Starbucks seems less risky to lend credit to because of a higher ratio. The debt to equity ratio makes Starbucks appear less likely to default on debt financing and Starbucks’ times interest earned ratio far exceeds that of Caribou’s. Starbucks also fairs better in meeting obligations using only cash from operations and has a greater return on net operating assets.