The Cheesecake Factory (CAKE)
Profitability ratios
Return on sales
| Jan 31, 2025 | Dec 31, 2024 | Jan 31, 2024 | Dec 31, 2023 | Jan 31, 2023 | |
|---|---|---|---|---|---|
| Gross profit margin | 77.50% | 53.61% | 40.94% | 53.32% | 38.76% |
| Operating profit margin | 4.98% | 4.98% | 3.16% | 3.16% | 2.53% |
| Pretax margin | 4.78% | 4.78% | 2.91% | 2.91% | 1.00% |
| Net profit margin | 4.38% | 4.38% | 2.95% | 2.95% | 1.31% |
The profitability ratios of The Cheesecake Factory have shown positive trends over the past few years. The gross profit margin, indicating the percentage of revenue that exceeds the cost of goods sold, has fluctuated between 38.76% and 77.50%. This suggests that the company has been effectively managing its production and sourcing costs to generate higher margins in more recent periods.
The operating profit margin, which reflects the percentage of revenue that translates to operating income after accounting for operating expenses, has also shown improvement from 2.53% to 4.98%. This indicates that the company has been successful in controlling its operating costs and improving operational efficiency.
The pretax margin, representing the proportion of revenue that results in pre-tax profits, has seen a steady increase from 1.00% to 4.78%. This signals that The Cheesecake Factory has been able to enhance its profitability before accounting for taxes by improving revenue generation and cost management.
Lastly, the net profit margin, representing the percentage of revenue that translates to net income after all expenses, has also displayed a positive trend from 1.31% to 4.38%. This indicates that the company's bottom line profitability has strengthened, reflecting effective management of both operating and non-operating expenses.
Overall, The Cheesecake Factory's profitability ratios demonstrate a consistent improvement in its ability to generate profits relative to its revenue, indicating sound financial performance and effective cost control measures.
Return on investment
| Jan 31, 2025 | Dec 31, 2024 | Jan 31, 2024 | Dec 31, 2023 | Jan 31, 2023 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.86% | 5.86% | 3.82% | 3.82% | 3.02% |
| Return on assets (ROA) | 5.15% | 5.15% | 3.57% | 3.57% | 1.55% |
| Return on total capital | 40.85% | 19.91% | 34.51% | 13.78% | 28.49% |
| Return on equity (ROE) | 35.35% | 35.35% | 31.87% | 31.87% | 14.77% |
The profitability ratios for The Cheesecake Factory show a positive trend over the period analyzed.
1. Operating Return on Assets (Operating ROA) increased from 3.02% as of January 31, 2023, to 5.86% as of January 31, 2025. This indicates that the company's operating income generated as a percentage of its total assets improved over time.
2. Return on Assets (ROA) also showed improvement, climbing from 1.55% on January 31, 2023, to 5.15% on January 31, 2025. ROA measures the overall efficiency of using assets to generate earnings, and the increasing trend indicates a better utilization of assets to generate profits.
3. Return on Total Capital had fluctuations but generally increased from January 31, 2023 (28.49%) to January 31, 2025 (40.85%). This ratio reflects how effectively the company is generating profits from its total capital employed in the business.
4. Return on Equity (ROE) showed a consistent increase from January 31, 2023 (14.77%) to January 31, 2025 (35.35%). ROE indicates the profitability of the company from the shareholders' perspective, showing how much profit is generated with the shareholders' equity.
In summary, The Cheesecake Factory demonstrated an improvement in profitability ratios over the evaluated period, indicating more effective use of assets, capital, and equity to generate earnings. This positive trend in profitability ratios suggests efficient management and solid financial performance.