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

Warning Sign:

Beneish M-Score 5.96 higher than -2.22, which implies that it might have manipulated its financial results.

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 5.96 signals that the company is a manipulator.

CAKE' s 10-Year Beneish M-Score Range
Min: -143.74   Max: 5.96
Current: 5.96

-143.74
5.96

During the past 13 years, the highest Beneish M-Score of Cheesecake Factory Inc was 5.96. The lowest was -143.74. And the median was -2.87.


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 * 0.9437+0.528 * 17.9597+0.404 * 1.0606+0.892 * 1.0452+0.115 * 0.9863
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0509+4.679 * -0.0956-0.327 * 1.2089
=5.96

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $11 Mil.
Revenue was 499.114 + 496.406 + 481.431 + 475.075 = $1,952 Mil.
Gross Profit was 88.712 + 95.385 + 86.986 + -243.525 = $28 Mil.
Total Current Assets was $174 Mil.
Total Assets was $1,106 Mil.
Property, Plant and Equipment(Net PPE) was $824 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $123 Mil.
Total Current Liabilities was $263 Mil.
Long-Term Debt was $25 Mil.
Net Income was 24.223 + 30.049 + 22.518 + 33 = $110 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 38.87 + 44.992 + 77.116 + 54.468 = $215 Mil.
Accounts Receivable was $11 Mil.
Revenue was 469.699 + 470.118 + 463.018 + 464.695 = $1,868 Mil.
Gross Profit was 206.359 + 92.204 + 86.764 + 88.182 = $474 Mil.
Total Current Assets was $216 Mil.
Total Assets was $1,101 Mil.
Property, Plant and Equipment(Net PPE) was $784 Mil.
Depreciation, Depletion and Amortization(DDA) was $77 Mil.
Selling, General & Admin. Expense(SGA) was $112 Mil.
Total Current Liabilities was $237 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)
=(11.013 / 1952.026) / (11.165 / 1867.53)
=0.00564183 / 0.00597848
=0.9437

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)
=(95.385 / 1867.53) / (88.712 / 1952.026)
=0.25354827 / 0.01411764
=17.9597

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 - (173.852 + 824.41) / 1105.514) / (1 - (216.091 + 784.319) / 1101.138)
=0.09701551 / 0.09147627
=1.0606

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
=1952.026 / 1867.53
=1.0452

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))
=(76.999 / (76.999 + 784.319)) / (82.167 / (82.167 + 824.41))
=0.08939672 / 0.09063433
=0.9863

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)
=(123.214 / 1952.026) / (112.168 / 1867.53)
=0.06312109 / 0.06006222
=1.0509

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 + 262.64) / 1105.514) / ((0 + 236.985) / 1101.138)
=0.26018666 / 0.21521826
=1.2089

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
=(109.79 - 0 - 215.446) / 1105.514
=-0.0956

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 5.96 signals that the company is likely to 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.78291.290.84831.03970.9081.37640.66121.2480.66710
GMI 0.97891.02181.00871.03430.96422.33491.01820.95110.96031.0667
AQI 0.74460.65080.88290.90181.02271.02681.01491.04171.024310.9316
SGI 1.21961.11271.14921.06270.99731.03581.05921.02921.03811.0526
DEPI 0.99961.02050.97520.88290.90150.99881.0060.97650.98710.0899
SGAI 1.03771.22240.98350.81481.05620.91760.94941.05131.06111.1051
LVGI 0.9691.11612.18551.17860.71170.68671.10761.06121.01460
TATA -0.0844-0.0706-0.0761-0.1014-0.148-0.0807-0.0979-0.0888-0.08040.0861
M-score -2.99-2.65-3.27-2.92-3.20-1.65-3.21-2.68-3.161.30

Cheesecake Factory Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.87181.2480.95631.03730.89330.66711.28630.80590.94370
GMI -0.00870.95110.95330.9710.73052.48252.52012.502917.95970.4126
AQI 1.021.04170.99420.96010.99771.02431.06731.13371.060610.9316
SGI 1.07391.02921.03481.02951.0251.03811.03271.03831.04521.0526
DEPI 0.96280.97650.97640.98430.99580.98710.99750.99630.98630.0899
SGAI 1.02721.05131.00111.00051.07561.06111.08811.07781.05091.065
LVGI 0.98061.06121.02961.0571.1281.01461.26371.33451.20890
TATA -0.0892-0.0888-0.0898-0.0947-0.1063-0.0804-0.1166-0.1159-0.0956-0.0507
M-score -3.48-2.68-2.95-2.91-3.25-2.35-2.00-2.445.960.32
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