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Cheesecake Factory Inc (NAS:CAKE)
Beneish M-Score
-2.95 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Cheesecake Factory Inc has a M-score of -2.95 suggests that the company is not a manipulator.

CAKE' s 10-Year Beneish M-Score Range
Min: -78.18   Max: 0.77
Current: -2.95

-78.18
0.77

During the past 13 years, the highest Beneish M-Score of Cheesecake Factory Inc was 0.77. The lowest was -78.18. And the median was -2.75.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Cheesecake Factory Inc for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.1545+0.528 * 0.9586+0.404 * 1.0673+0.892 * 1.0327+0.115 * 0.9975
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0881+4.679 * -0.1166-0.327 * 1.2637
=-2.95

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $41 Mil.
Revenue was 481.431 + 475.075 + 469.699 + 470.118 = $1,896 Mil.
Gross Profit was 86.986 + -243.525 + 206.359 + 92.204 = $142 Mil.
Total Current Assets was $167 Mil.
Total Assets was $1,074 Mil.
Property, Plant and Equipment(Net PPE) was $803 Mil.
Depreciation, Depletion and Amortization(DDA) was $80 Mil.
Selling, General & Admin. Expense(SGA) was $117 Mil.
Total Current Liabilities was $258 Mil.
Long-Term Debt was $25 Mil.
Net Income was 22.518 + 33 + 27.481 + 28.583 = $112 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 77.116 + 54.468 + 61.671 + 43.514 = $237 Mil.
Accounts Receivable was $35 Mil.
Revenue was 463.018 + 464.695 + 453.819 + 454.749 = $1,836 Mil.
Gross Profit was 86.764 + -240.276 + 196.569 + 88.774 = $132 Mil.
Total Current Assets was $211 Mil.
Total Assets was $1,071 Mil.
Property, Plant and Equipment(Net PPE) was $763 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $104 Mil.
Total Current Liabilities was $224 Mil.
Long-Term Debt was $0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(41.493 / 1896.323) / (34.802 / 1836.281)
=0.02188077 / 0.01895244
=1.1545

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(-243.525 / 1836.281) / (86.986 / 1896.323)
=0.07179239 / 0.07489441
=0.9586

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (166.515 + 803.334) / 1073.756) / (1 - (211.112 + 762.884) / 1071.108)
=0.09676966 / 0.09066499
=1.0673

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1896.323 / 1836.281
=1.0327

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(75.365 / (75.365 + 762.884)) / (79.579 / (79.579 + 803.334))
=0.08990765 / 0.09013232
=0.9975

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(117.181 / 1896.323) / (104.28 / 1836.281)
=0.0617938 / 0.05678869
=1.0881

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((25 + 258.448) / 1073.756) / ((0 + 223.747) / 1071.108)
=0.26397804 / 0.20889303
=1.2637

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(111.582 - 0 - 236.769) / 1073.756
=-0.1166

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Cheesecake Factory Inc has a M-score of -2.95 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Cheesecake Factory Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.81960.89531.54691.06080.75480.70281.12240.97571.24491.0773
GMI 1.20440.97891.02181.00871.03432.37090.94961.01820.95110.9603
AQI 1.11520.74460.65080.88290.90181.02271.02681.01491.04171.0243
SGI 1.25251.21961.11271.14921.06270.99731.03581.05921.02921.0381
DEPI 1.05480.99961.02050.97520.88290.90150.99881.0060.97650.9871
SGAI 0.15771.03771.22240.98350.81481.02180.94850.94941.05131.0611
LVGI 1.03820.9691.11612.18551.17860.71170.68671.10761.06121.0146
TATA -0.113-0.0844-0.0706-0.0761-0.1014-0.148-0.083-0.0981-0.0888-0.0804
M-score -2.66-2.89-2.41-3.08-3.19-2.64-2.63-2.92-2.68-2.78

Cheesecake Factory Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.97571.16931.34121.18681.24491.11321.00290.89371.07731.1545
GMI 1.01821.00410.97170.71692.59352.50632.51263.1880.91040.9586
AQI 1.01491.04471.01311.021.04170.99420.96010.99771.02431.0673
SGI 1.05921.06091.06771.07391.02921.03481.02951.0251.03811.0327
DEPI 1.0060.99250.970.96280.97650.97640.98430.99580.98710.9975
SGAI 0.94940.98250.99180.98181.05131.00111.00051.07561.06111.0881
LVGI 1.10761.06430.95390.98061.06121.02961.0571.1281.01461.2637
TATA -0.0981-0.0887-0.0756-0.0887-0.0888-0.0898-0.0947-0.1063-0.0804-0.1166
M-score -2.92-2.68-2.46-2.79-1.82-1.98-2.13-1.95-2.81-2.95
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