The Cheesecake Factory (CAKE)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	101,351	43,123	72,373	-253,365	127,293
Total stockholders’ equity	US$ in thousands	318,062	292,003	330,166	288,693	571,742
ROE		31.87%	14.77%	21.92%	-87.76%	22.26%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $101,351K ÷ $318,062K
= 31.87%

The return on equity (ROE) for The Cheesecake Factory has experienced fluctuations over the past five years. In 2023, the ROE improved significantly to 31.87%, indicating that for every dollar of equity invested, the company generated a return of 31.87%. This is a positive signal as higher ROE suggests better profitability and efficiency in utilizing shareholder funds.

In 2022, the ROE was 14.77%, showing a moderate performance compared to the previous year. The company's ROE then rose to 21.92% in 2021, indicating an improvement in profitability and efficiency. However, the ROE experienced a significant decline in 2020, dropping to -87.76%. A negative ROE is concerning as it implies the company incurred a net loss and shareholder wealth decreased during that time.

The sharp recovery in 2023 to 31.87% indicates a strong bounce back in profitability and efficiency. It would be important to conduct further analysis to understand the factors behind the fluctuations in ROE and assess the sustainability of the company's improved performance.