The Cheesecake Factory (CAKE)

Short-term

Turnover ratios

The Cheesecake Factory's activity ratios indicate the efficiency of the company in managing its operational resources.

1. Inventory Turnover: The trend of inventory turnover shows a fluctuation over the years, with a decrease from 45.39 in 2021 to 25.75 in 2024. A high inventory turnover indicates that the company is selling its inventory quickly, which is generally a positive sign. However, the recent decline in inventory turnover may signal potential issues with managing inventory levels efficiently.

2. Receivables Turnover: The receivables turnover ratio has been consistently increasing from 53.74 in 2020 to 205.64 in 2024. A higher receivables turnover ratio indicates that the company is collecting its accounts receivable more frequently, which is a positive indicator of effective credit management and sales collection.

3. Payables Turnover: The payables turnover ratio shows a relatively stable trend over the years, hovering between 23.23 and 35.95. A higher payables turnover ratio suggests that the company is efficiently managing its payables by paying its creditors quickly.

4. Working Capital Turnover: The data provided does not include information on working capital turnover for The Cheesecake Factory across the years. Working capital turnover measures how efficiently the company is using its working capital to generate sales revenue, and the absence of this data limits the comprehensive analysis of the company's overall efficiency in this aspect.

In conclusion, while The Cheesecake Factory shows strengths in managing its receivables and payables efficiently, it may need to address the recent decline in inventory turnover to optimize its inventory management and operational efficiency.

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Average number of days

The activity ratios of The Cheesecake Factory show fluctuations in its operational efficiency over the years.

- Days of Inventory on Hand (DOH) decreased from 9.39 days in 2020 to 8.04 days in 2021, indicating a more efficient management of inventory. However, there was an increase in DOH to 14.17 days by 2024, suggesting a potential slowdown in inventory turnover.

- Days of Sales Outstanding (DSO) decreased significantly from 6.79 days in 2020 to 1.77 days in 2024, signaling faster collection of accounts receivable. This improvement indicates effective credit management and prompt customer payments.

- Number of Days of Payables decreased from 13.96 days in 2020 to 10.15 days in 2021, but then increased to 13.64 days by 2024. This trend suggests changes in the company's payment strategies and relationships with suppliers.

Overall, The Cheesecake Factory demonstrated improvements in receivables and payables management, but experienced challenges in inventory turnover efficiency in the later years. Continued monitoring and analysis of these activity ratios will be essential for assessing the company's operational performance and financial health.

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Long-term

The long-term activity ratios provide insight into how efficiently The Cheesecake Factory is utilizing its assets to generate sales over a period of time.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how effectively the company is using its fixed assets to generate revenue.
- The ratio has shown a consistent upward trend over the years, increasing from 2.56 in 2020 to 4.26 in 2024.
- This indicates that The Cheesecake Factory has been able to generate more sales per dollar invested in fixed assets, reflecting efficient utilization of property, plant, and equipment.

2. Total Asset Turnover:
- The Total Asset Turnover ratio measures the effectiveness of the company in generating sales from all its assets.
- The ratio has also shown a positive trend, increasing from 0.72 in 2020 to 1.18 in 2024.
- This indicates that the company has been able to generate more sales relative to its total assets over the years, showcasing improved asset efficiency and operational performance.

In conclusion, both the Fixed Asset Turnover and Total Asset Turnover ratios for The Cheesecake Factory have demonstrated positive trends, suggesting that the company has been effectively utilizing its assets to generate revenue and improve operational efficiency over the analyzed period.