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GuruFocus has detected 3 Warning Signs with Cheesecake Factory Inc $CAKE.
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Cheesecake Factory Inc (NAS:CAKE)
Beneish M-Score
-2.85 (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 -2.85 suggests that the company is not a manipulator.

CAKE' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -0.32
Current: -2.85

-3.31
-0.32

During the past 13 years, the highest Beneish M-Score of Cheesecake Factory Inc was -0.32. The lowest was -3.31. And the median was -2.80.


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 * 1.0191+0.528 * 0.9926+0.404 * 1.3326+0.892 * 1.0834+0.115 * 0.9925
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9811+4.679 * -0.1261-0.327 * 1.0252
=-2.85

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $16 Mil.
Revenue was 603.146 + 560.018 + 558.862 + 553.693 = $2,276 Mil.
Gross Profit was 116.549 + 109.736 + 114.738 + 107.705 = $449 Mil.
Total Current Assets was $221 Mil.
Total Assets was $1,293 Mil.
Property, Plant and Equipment(Net PPE) was $910 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $146 Mil.
Total Current Liabilities was $377 Mil.
Long-Term Debt was $0 Mil.
Net Income was 32.381 + 34.574 + 38.585 + 33.954 = $139 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 85.99 + 64.744 + 75.478 + 76.308 = $303 Mil.
Accounts Receivable was $14 Mil.
Revenue was 526.841 + 526.688 + 529.107 + 517.973 = $2,101 Mil.
Gross Profit was 103.494 + 100.555 + 110.314 + 96.757 = $411 Mil.
Total Current Assets was $225 Mil.
Total Assets was $1,233 Mil.
Property, Plant and Equipment(Net PPE) was $892 Mil.
Depreciation, Depletion and Amortization(DDA) was $86 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $350 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)
=(15.632 / 2275.719) / (14.159 / 2100.609)
=0.00686904 / 0.00674043
=1.0191

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)
=(411.12 / 2100.609) / (448.728 / 2275.719)
=0.19571467 / 0.19718076
=0.9926

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 - (221.427 + 910.134) / 1293.319) / (1 - (225.396 + 892.191) / 1233.346)
=0.125072 / 0.09385768
=1.3326

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
=2275.719 / 2100.609
=1.0834

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))
=(85.563 / (85.563 + 892.191)) / (88.01 / (88.01 + 910.134))
=0.08750974 / 0.08817365
=0.9925

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)
=(146.042 / 2275.719) / (137.402 / 2100.609)
=0.064174 / 0.06541055
=0.9811

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)
=((0 + 376.526) / 1293.319) / ((0 + 350.226) / 1233.346)
=0.29113158 / 0.28396411
=1.0252

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
=(139.494 - 0 - 302.52) / 1293.319
=-0.1261

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 -2.85 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 local exchange's currency.

Cheesecake Factory Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.84831.03970.9081.37640.66121.2480.66711.42970.87831.0191
GMI 1.03721.1710.93540.94961.01820.95110.96031.06670.9350.9926
AQI 0.88290.90181.02271.02681.01491.04171.02431.0231.00291.3326
SGI 1.14921.06270.99731.03581.05921.02921.03811.05261.06271.0834
DEPI 0.97520.88290.90150.99881.0060.97650.98710.98871.03890.9925
SGAI 0.98350.81481.02180.94850.94941.17530.94910.98621.08560.9811
LVGI 2.18551.17860.71170.68671.10761.06121.01461.17951.02421.0252
TATA -0.0761-0.1014-0.148-0.083-0.0981-0.0888-0.0804-0.1191-0.0964-0.1261
M-score -3.26-2.85-3.21-2.39-3.21-2.70-3.14-2.61-3.04-2.85

Cheesecake Factory Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.94371.42971.02030.90410.92890.87830.97481.55091.21031.0191
GMI 1.0261.06671.04831.01890.9770.9350.9340.95930.96970.9926
AQI 1.06061.0231.01610.99951.00031.00290.99680.99271.01731.3326
SGI 1.04521.05261.06161.06411.06221.06271.06121.05881.06081.0834
DEPI 0.98630.98870.98221.00611.02541.03891.03881.02041.0110.9925
SGAI 0.94761.02020.96720.9630.95741.08561.10881.08121.10360.9811
LVGI 1.20891.17951.08331.06210.951.02420.89790.91871.02161.0252
TATA -0.0956-0.1191-0.1069-0.1078-0.1071-0.0964-0.1042-0.1165-0.13-0.1261
M-score -2.96-2.61-2.90-3.02-2.98-3.04-2.95-2.48-2.87-2.85
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