The Cheesecake Factory (CAKE)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	14.17	13.11	13.10	8.04	9.39
Days of sales outstanding (DSO)	days	1.77	2.19	2.38	4.51	6.79
Number of days of payables	days	13.64	14.36	15.71	10.15	13.96
Cash conversion cycle	days	2.31	0.94	-0.23	2.40	2.22

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 14.17 + 1.77 – 13.64
= 2.31

The cash conversion cycle of The Cheesecake Factory has shown some fluctuation over the years based on the provided data. As of December 31, 2020, the company's cash conversion cycle stood at 2.22 days, indicating that on average it takes the company approximately 2.22 days to convert its investment into raw materials into cash inflows from sales.

By December 31, 2021, the cash conversion cycle increased slightly to 2.40 days, suggesting a longer overall cycle of converting inputs to cash. This could indicate potential challenges in managing working capital efficiently.

On December 31, 2022, the cash conversion cycle appears to have decreased significantly to -0.23 days. A negative cash conversion cycle may suggest that the company is able to receive cash from customers before paying its suppliers, potentially improving cash flow and liquidity.

By December 31, 2023, the cash conversion cycle increased to 0.94 days. Although the cycle remains positive, this uptick may be a reflection of changes in the company's operations impacting its ability to efficiently convert inputs into cash inflows.

As of December 31, 2024, the cash conversion cycle increased once again to 2.31 days, nearing the level seen in 2021. This may indicate ongoing challenges in managing working capital effectively and efficiently within the company's operations.

In summary, The Cheesecake Factory's cash conversion cycle has shown variability over the years, with fluctuations indicating potential shifts in the company's working capital management and operational efficiency. Regular monitoring and optimization of the cash conversion cycle are crucial for sustaining healthy cash flow and overall financial performance.