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Cheesecake Factory Inc (NAS:CAKE)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

CAKE' s 10-Year Beneish M-Score Range
Min: -78.18   Max: 0.77
Current: -3.05

-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 -2.76.


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 * 1.0279+0.528 * 0.9672+0.404 * 1.1337+0.892 * 1.0383+0.115 * 0.9963
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0778+4.679 * -0.1159-0.327 * 1.3345
=-3.05

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $43 Mil.
Revenue was 496.406 + 481.431 + 475.075 + 469.699 = $1,923 Mil.
Gross Profit was 95.385 + 86.986 + -243.525 + 206.359 = $145 Mil.
Total Current Assets was $163 Mil.
Total Assets was $1,081 Mil.
Property, Plant and Equipment(Net PPE) was $811 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $118 Mil.
Total Current Liabilities was $255 Mil.
Long-Term Debt was $25 Mil.
Net Income was 30.049 + 22.518 + 33 + 27.481 = $113 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 44.992 + 77.116 + 54.468 + 61.671 = $238 Mil.
Accounts Receivable was $41 Mil.
Revenue was 470.118 + 463.018 + 464.695 + 453.819 = $1,852 Mil.
Gross Profit was 92.204 + 86.764 + -240.276 + 196.569 = $135 Mil.
Total Current Assets was $262 Mil.
Total Assets was $1,125 Mil.
Property, Plant and Equipment(Net PPE) was $766 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $106 Mil.
Total Current Liabilities was $218 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)
=(43.43 / 1922.611) / (40.69 / 1851.65)
=0.02258907 / 0.021975
=1.0279

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)
=(86.986 / 1851.65) / (95.385 / 1922.611)
=0.0730489 / 0.0755249
=0.9672

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 - (163.415 + 810.855) / 1080.521) / (1 - (261.702 + 765.62) / 1124.887)
=0.09833312 / 0.08673316
=1.1337

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
=1922.611 / 1851.65
=1.0383

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))
=(76.071 / (76.071 + 765.62)) / (80.898 / (80.898 + 810.855))
=0.09037877 / 0.09071795
=0.9963

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)
=(118.412 / 1922.611) / (105.813 / 1851.65)
=0.06158916 / 0.05714525
=1.0778

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 + 254.913) / 1080.521) / ((0 + 218.358) / 1124.887)
=0.25905373 / 0.1941155
=1.3345

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
=(113.048 - 0 - 238.247) / 1080.521
=-0.1159

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 -3.05 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.16931.34121.18681.24491.11321.00290.89371.07731.15451.0279
GMI 1.00410.97170.71692.59352.50632.51263.1880.91040.95860.9672
AQI 1.04471.01311.021.04170.99420.96010.99771.02431.06731.1337
SGI 1.06091.06771.07391.02921.03481.02951.0251.03811.03271.0383
DEPI 0.99250.970.96280.97650.97640.98430.99580.98710.99750.9963
SGAI 0.98250.99180.98181.05131.00111.00051.07561.06111.08811.0778
LVGI 1.06430.95390.98061.06121.02961.0571.1281.01461.26371.3345
TATA -0.0887-0.0756-0.0887-0.0888-0.0898-0.0947-0.1063-0.0804-0.1166-0.1159
M-score -2.68-2.46-2.79-1.82-1.98-2.13-1.95-2.81-2.95-3.05
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