The Cheesecake Factory (CAKE)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	2,840,380	2,775,220	2,798,120	2,747,050	2,840,590
Total stockholders’ equity	US$ in thousands	318,062	292,003	330,166	288,693	571,742
Financial leverage ratio		8.93	9.50	8.47	9.52	4.97

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,840,380K ÷ $318,062K
= 8.93

The financial leverage ratio for The Cheesecake Factory has shown fluctuation over the past five years. The ratio indicates the proportion of the company's total assets that are financed by debt as opposed to equity. A higher financial leverage ratio suggests a higher level of debt relative to equity in the company's capital structure.

Looking at the trend from 2019 to 2023, we observe that the financial leverage ratio increased from 4.97 in 2019 to 9.50 in 2022, reflecting a significant rise in the company's reliance on debt to finance its operations and growth. However, in 2023, the ratio decreased to 8.93, indicating a slight reduction in the company's debt levels compared to the previous year.

It is important to note that a high financial leverage ratio can indicate increased financial risk for the company, as higher debt levels often come with higher interest payments and potential challenges in meeting debt obligations. On the other hand, a lower ratio may suggest a more conservative capital structure with a greater reliance on equity financing, which can offer financial stability and reduce the risk of financial distress.

Overall, The Cheesecake Factory's financial leverage ratio has been fluctuating, and further analysis of the company's debt management strategies and overall financial health would be necessary to assess the implications of these fluctuations on its long-term financial performance and stability.