Financial Analysis of the Cheesecake Factory Essay

Table of Contents IntroductionÂ…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â….3 Section 1Â…Â…..Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â….3 Section 2- Ratio AnalysisÂ…Â…...Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…8 Table 1- Ratio Analysis for 3 restaurantsÂ…...Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…..8 Section 3- Vertical AnalysisÂ…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…9 Table 2- Vertical/Common Size AnalysisÂ…...Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…9 Section 4- Major Elements of Cash FlowÂ…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â….10 Table 3- Cash Flow Comparison for 3 restaurantsÂ…...Â…Â…Â…Â…Â…Â…Â…..10 Figure 1- Comparison of Net Income Â…...Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…Â…11 Figure 2- Comparison of Net Cash Flow from Operating ActivitiesÂ….Â….11 Figure 3- Comparison of Net Cash Flow from Investing ActivitiesÂ…Â…Â…12 Figure 4- Comparison of Net Cash Flow from Financing ActivitiesÂ…Â…...12 Figure 5- Comparison of Net Change in†¦show more content†¦Changs is the lowest with nearly a 1:1 ratio of current assets to current liabilities. Cheesecake Factory appears to be more efficient in converting its receivables into cash and selling its inventory. Receivables for the factory were converted into cash almost 29 times during the year, indicating that it typically took less than 13 days to receive cash from the receivables. In addition CF goes through inventory pretty quickly, most inventory is kept on hand less than 12 days and was turned over a total of 32 times during 2003. The number for inventory turn over seems particularly impressive considering that CF has the largest menu selection of the three restaurants. The restaurant purchasers must carefully examine the eating trends of the customers so that they purchase the right amount of ingredients/entrà ©e components and arent stuck with excess inventory. Inventory turnover is really important in the restaurant industry because most of the inventory accounted for is food, a majority of which is perishable. The quicker the inventory can be turned over, the less money wasted. CPK and PF Changs are slower at converting their receivables into cash, and slower at turning inventory into sales. For 2003, CPK converted their receivables into cash less than 3 times, the outstanding time for receivables was about 133 days. P.F. Changs converted their receivables to cash less than 2 times in 2003 with an outstanding time of 291 days. Inventory was on hand, for CPK and PF ChangsShow MoreRelatedThe Business Of Cheesecake Factory1324 Words   |  6 PagesThis paper is about Cheesecake Factory. Inc (SIC:5812), one of the most famous restaurants chain in the United States. This restaurant chain garnered people’s attention when it was founded in 1978 in Beverly Hills, California. Nowadays, there are hundreds of restaurants that have opened their doors under the Cheesecake name. 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