The Cheesecake Factory (CAKE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 27.85 | 27.87 | 45.39 | 38.89 | 34.96 |
| Receivables turnover | 166.40 | 153.48 | 80.93 | 53.74 | 82.07 |
| Payables turnover | 25.43 | 23.23 | 35.95 | 26.15 | 26.65 |
| Working capital turnover | — | — | — | — | — |
The Cheesecake Factory's activity ratios provide insights into how efficiently the company manages its inventory, receivables, and payables.
1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells its average inventory in a given period. The consistent high inventory turnover ratios over the past five years (ranging from 27.85 to 45.39) indicate that The Cheesecake Factory efficiently manages its inventory levels and quickly turns over its inventory into sales.
2. Receivables Turnover: The receivables turnover ratio reflects how efficiently a company collects outstanding accounts receivable. The increasing trend in The Cheesecake Factory's receivables turnover ratios (from 53.74 in 2020 to 166.40 in 2023) indicates that the company has improved its collection process and is collecting receivables at a faster rate.
3. Payables Turnover: The payables turnover ratio demonstrates how quickly a company pays off its suppliers. The stable payables turnover ratios for The Cheesecake Factory (ranging from 23.23 to 35.95) suggest a consistent payment relationship with suppliers, maintaining a balanced approach between paying suppliers promptly and managing cash flow effectively.
4. Working Capital Turnover: The data provided does not include the information on working capital turnover for The Cheesecake Factory. This ratio measures how effectively the company utilizes its working capital to generate sales. Without this information, a comprehensive analysis of the company's efficiency in managing working capital is incomplete.
Overall, The Cheesecake Factory's strong inventory turnover, improving receivables turnover, and stable payables turnover ratios indicate efficient management of its operating cycle and effective utilization of resources to drive sales and profitability.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 13.11 | 13.10 | 8.04 | 9.39 | 10.44 |
| Days of sales outstanding (DSO) | days | 2.19 | 2.38 | 4.51 | 6.79 | 4.45 |
| Number of days of payables | days | 14.36 | 15.71 | 10.15 | 13.96 | 13.70 |
The activity ratios for The Cheesecake Factory show trends over the past five years.
1. Days of Inventory on Hand (DOH): This ratio indicates how efficiently the company manages its inventory. The longer the days of inventory on hand, the less efficient the inventory management. The trend for The Cheesecake Factory shows a fluctuation in DOH over the years, with 2021 showing a significant increase in inventory days compared to prior years. In 2023, the DOH decreased slightly compared to 2022, suggesting a potential improvement in inventory management efficiency.
2. Days of Sales Outstanding (DSO): DSO provides insight into how long it takes for the company to collect its accounts receivable. A lower DSO indicates efficient collection practices. The trend for The Cheesecake Factory shows a decrease in DSO from 2019 to 2023, which signifies an improvement in the collection of accounts receivable over the years.
3. Number of Days of Payables: This ratio reflects how long the company takes to pay its suppliers. A longer number of days of payables indicates better liquidity for the company. The trend for The Cheesecake Factory indicates a fluctuation in the number of days of payables over the years, with slight decreases in 2021 and 2023 compared to 2020 and 2022. This could suggest varying relationships with suppliers or changes in payment terms.
Overall, while there have been fluctuations in the activity ratios over the years, the recent trends show potential improvements in inventory management efficiency, accounts receivable collection, and payables management for The Cheesecake Factory.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.35 | 4.43 | 3.95 | 2.56 | 2.98 |
| Total asset turnover | 1.21 | 1.19 | 1.05 | 0.72 | 0.87 |
The long-term activity ratios of The Cheesecake Factory, namely the Fixed Asset Turnover and Total Asset Turnover, provide insights into the efficiency with which the company utilizes its assets to generate sales.
Starting with the Fixed Asset Turnover, we observe a generally positive trend over the past five years, indicating that the company has been increasingly efficient in generating sales relative to its investment in fixed assets. The ratios have improved from 2.98 in 2019 to 4.35 in 2023. This suggests that for every dollar invested in fixed assets, the company generated $4.35 in sales in 2023, reflecting improved operational efficiency and effective utilization of fixed assets to drive revenue.
Moving on to the Total Asset Turnover, we see a similar improving trend, although showing a slightly lower level of efficiency compared to the Fixed Asset Turnover. The ratios have increased from 0.87 in 2019 to 1.21 in 2023. This indicates that the company has been able to generate $1.21 in sales for every dollar invested in total assets by the end of 2023.
Overall, the increasing trend in both the Fixed Asset Turnover and Total Asset Turnover ratios signifies that The Cheesecake Factory has been leveraging its assets more effectively over the years to drive sales growth and enhance operational efficiency. This improvement indicates a positive outlook for the company's long-term asset management and operational performance.