The Cheesecake Factory (CAKE)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	14.17	15.46	15.84	14.71	13.11	21.33	18.72	15.58	13.10	10.43	8.95	8.25	8.04	8.28	8.65	9.44	9.39	9.16	9.64	10.32
Days of sales outstanding (DSO)	days	1.77	2.99	2.59	2.09	2.19	2.53	2.43	—	2.38	2.71	4.60	4.35	4.51	5.33	5.12	6.40	6.79	12.36	16.98	10.53
Number of days of payables	days	13.64	13.88	15.31	13.79	14.36	19.41	22.36	15.06	15.71	9.88	10.08	10.91	10.15	10.12	11.44	13.58	13.96	14.94	13.69	12.06
Cash conversion cycle	days	2.31	4.57	3.11	3.01	0.94	4.45	-1.20	0.53	-0.23	3.26	3.46	1.69	2.40	3.49	2.33	2.26	2.22	6.57	12.93	8.78

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 fluctuations over the past few years. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales.

In March 2020, the cash conversion cycle was 8.78 days, indicating that the company took just over a week to convert its investments to cash. By June 2020, this number increased to 12.93 days, suggesting a longer period for the conversion process. However, in September 2020, the cycle decreased to 6.57 days, indicating a more efficient conversion process.

The trend continued to improve by December 2020, with a significant reduction to 2.22 days, suggesting a rapid transformation of investments into cash flow. This efficiency was maintained in the following quarters, with the cycle ranging between 1.69 to 4.57 days up to September 2024.

Notably, in December 2022 and June 2023, the cash conversion cycle temporarily showed negative values, which could indicate that the company was able to generate cash before paying its obligations. Despite these fluctuations, the overall trend shows that The Cheesecake Factory has managed to improve its cash conversion efficiency over the analyzed period.