The Cheesecake Factory (CAKE)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.46 | 0.44 | 0.48 | 0.50 | 0.53 | 0.52 | 0.63 | 0.62 | 0.64 | 0.56 | 0.55 | 0.62 | 0.58 | 0.76 | 0.85 | 0.53 | 0.40 | 1.04 | 0.36 | 0.35 |
| Quick ratio | 0.12 | 0.14 | 0.18 | 0.19 | 0.21 | 0.26 | 0.38 | 0.37 | 0.35 | 0.31 | 0.33 | 0.39 | 0.33 | 0.58 | 0.66 | 0.30 | 0.14 | 0.71 | 0.05 | 0.05 |
| Cash ratio | 0.09 | 0.10 | 0.15 | 0.19 | 0.17 | 0.22 | 0.31 | 0.31 | 0.30 | 0.24 | 0.27 | 0.33 | 0.26 | 0.45 | 0.47 | 0.16 | 0.10 | 0.71 | 0.05 | 0.05 |
The liquidity ratios of The Cheesecake Factory indicate a fluctuating ability to meet its short-term obligations with its current assets. The current ratio has decreased from 0.64 in Dec 2021 to 0.46 in Dec 2023, suggesting a decline in the company's ability to cover its current liabilities with its current assets. The quick ratio and cash ratio have also shown a downward trend, reflecting a decreasing ability to cover immediate obligations with the most liquid assets.
The quick ratio fell from 0.66 in Jun 2020 to 0.12 in Dec 2023, indicating a substantial decrease in the company's ability to cover its short-term liabilities without relying on inventory. The cash ratio has decreased from 0.47 in Jun 2020 to 0.09 in Dec 2023, pointing to a reduced ability to cover current liabilities with cash and cash equivalents.
Overall, the decreasing trend in liquidity ratios raises concerns about the company's short-term financial health and ability to meet its obligations as they come due. Monitoring these ratios closely and addressing the factors contributing to the declining trend will be crucial for ensuring the company's liquidity and financial stability.
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 1.31 | 6.41 | -2.01 | 0.72 | -0.23 | 3.26 | 3.46 | 1.69 | 2.40 | 3.49 | 2.33 | 2.26 | 2.22 | 6.57 | 12.93 | 8.78 | 1.19 | 2.72 | 2.36 | 1.33 |
The cash conversion cycle for The Cheesecake Factory has shown fluctuations over the past several quarters. The cash conversion cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
In the most recent quarter, ending December 31, 2023, the company had a positive cash conversion cycle of 1.31 days, indicating that it was able to convert its resources into cash relatively quickly. This is an improvement from the previous quarter, where the company had a longer cash conversion cycle of 6.41 days.
Looking at the trend over the past year, the cash conversion cycle has generally been positive, indicating efficient management of working capital. However, there were a few quarters, such as in September 2020 and June 2020, where the cash conversion cycle was in the negative territory, suggesting that the company was able to generate cash even before paying off its obligations.
Overall, the analysis of The Cheesecake Factory's cash conversion cycle suggests that the company has been effectively managing its working capital and converting its resources into cash in a timely manner. It is essential for the company to continue monitoring and optimizing this cycle to ensure efficient operations and healthy cash flows.