The Cheesecake Factory (CAKE)

Short-term

Turnover ratios

The Cheesecake Factory's inventory turnover ratio, which measures how many times the company's inventory is sold and replaced during a given period, showed a generally decreasing trend from January 2023 to January 2025. The ratio peaked at 36.41 in January 2023 but gradually declined to 12.49 by January 2025. This decline could indicate potential issues with managing inventory efficiently and effectively.

Regarding receivables turnover, this ratio reflects how many times a company collects accounts receivable during a specific period. The Cheesecake Factory's data indicates that receivables turnover was 166.40 in December 2023 and improved to 205.64 by December 2024. However, the company did not report any data for the other periods, making it difficult to assess trends in collecting receivables over time.

In terms of payables turnover, which gauges how efficiently a company pays its suppliers, The Cheesecake Factory showed a relatively stable performance. The ratio remained within a narrow range, with values of 25.43 in December 2023 and 26.76 in December 2024. The lack of reported data for other periods limits a more comprehensive analysis of this metric.

Lastly, working capital turnover, a measure of how effectively a company utilizes its working capital to generate sales revenue, was not reported for any of the periods provided. This absence of data makes it challenging to evaluate The Cheesecake Factory's efficiency in utilizing its working capital.

Overall, the analysis of The Cheesecake Factory's activity ratios indicates varying trends in inventory turnover, improvements in receivables turnover, stable performance in payables turnover, and insufficient information to assess working capital turnover. Further analysis and additional contextual information would be necessary to fully understand the implications of these ratios on the company's operational efficiency and financial health.

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Average number of days

The Cheesecake Factory's activity ratios reflect the company's efficiency in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- In January 2023, the company held its inventory for an average of 10.02 days before it was sold.
- The DOH increased to 13.11 days by December 2023, indicating a slight slowdown in inventory turnover.
- By January 2024, the DOH decreased to 10.36 days, showing an improvement in inventory management.
- However, by December 2024, the DOH increased significantly to 14.17 days, which might suggest potential issues with inventory control.
- In January 2025, the DOH surged to 29.22 days, indicating a substantial delay in converting inventory into sales. This could potentially lead to higher carrying costs and lower liquidity.

2. Days of Sales Outstanding (DSO):
- In December 2023, the company took 2.19 days on average to collect its receivables.
- For the other periods provided, the DSO was not available, which makes it challenging to assess the trend in receivables management.

3. Number of Days of Payables:
- In December 2023, it took the company an average of 14.36 days to pay its suppliers.
- The exact number of days of payables was not disclosed for the other periods, making it difficult to analyze the trend in payables management.

Based on the available data, The Cheesecake Factory shows some fluctuations in its activity ratios over the years. The company should focus on optimizing its inventory turnover rate to avoid excess inventory buildup and improve cash flow. Additionally, maintaining efficient receivables and payables management can help enhance liquidity and overall financial performance.

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Long-term

The Cheesecake Factory's long-term activity ratios provide insights into how efficiently the company is utilizing its assets to generate sales.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how effectively a company is generating revenue from its investment in fixed assets.
- In January 2023, the ratio was 1.64, indicating that the company generated $1.64 in sales for every $1 invested in fixed assets.
- The ratio significantly improved by December 2023 to 4.35, suggesting a more efficient use of fixed assets to generate higher sales.
- There was no data available for January 2024, but by December 2024, the ratio remained strong at 4.26.
- The improvement and consistency in the fixed asset turnover ratio suggest that The Cheesecake Factory is effectively utilizing its fixed assets to drive sales growth.

2. Total Asset Turnover:
- The total asset turnover ratio indicates how efficiently a company is using all its assets to generate revenue.
- In January 2023 and December 2023, the ratio was 1.19 and 1.21, respectively, implying that the company generated $1.19 and $1.21 in sales for each dollar of total assets.
- The ratio remained consistent in January 2024 and December 2024 at 1.21 and 1.18, respectively.
- A stable total asset turnover ratio suggests that The Cheesecake Factory has been maintaining a consistent level of sales relative to its total assets over the years analyzed.

Overall, the improvement in the fixed asset turnover ratio and the stable total asset turnover ratio indicate that The Cheesecake Factory has been efficiently utilizing its assets, particularly fixed assets, to drive sales and generate revenue.