The Cheesecake Factory (CAKE)

Inventory turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Cost of revenue (ttm)	US$ in thousands	1,661,614	1,647,782	1,636,248	1,624,250	1,605,723	1,003,784	1,186,635	1,381,831	1,548,333	2,180,064	2,132,945	2,065,869	1,944,608	1,906,799	1,767,440	1,506,505	1,527,717	1,503,521	1,533,367	1,691,320
Inventory	US$ in thousands	64,526	69,805	70,987	65,469	57,654	58,672	60,868	58,989	55,559	62,275	52,286	46,680	42,839	43,270	41,868	38,955	39,288	37,727	40,511	47,822
Inventory turnover		25.75	23.61	23.05	24.81	27.85	17.11	19.50	23.43	27.87	35.01	40.79	44.26	45.39	44.07	42.21	38.67	38.89	39.85	37.85	35.37

December 31, 2024 calculation

Inventory turnover = Cost of revenue (ttm) ÷ Inventory
= $1,661,614K ÷ $64,526K
= 25.75

The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times a company's inventory is sold and replaced within a specific time period. In the case of The Cheesecake Factory, the inventory turnover has exhibited some fluctuations over the past few years.

From March 31, 2020, to June 30, 2021, The Cheesecake Factory experienced a consistent upward trend in its inventory turnover, indicating an improvement in managing its inventory. The ratio increased from 35.37 to 42.21 during this period, showing that the company was selling and replacing its inventory at a faster rate.

However, from September 30, 2021, to December 31, 2024, there were fluctuations in the inventory turnover ratio. The ratio peaked at 45.39 on December 31, 2021, but then declined to 17.11 on September 30, 2023, before recovering slightly to 25.75 on December 31, 2024. These fluctuations suggest some challenges in managing the inventory efficiently during this period.

Overall, it is important for The Cheesecake Factory to closely monitor and improve its inventory turnover to ensure optimal utilization of resources and to avoid excess inventory buildup, which can tie up capital and lead to increased storage costs.