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Cheesecake Factory Inc (NAS:CAKE)
Beneish M-Score
-3.04 (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 -3.04 suggests that the company is not a manipulator.

CAKE' s Beneish M-Score Range Over the Past 10 Years
Min: -3.48   Max: -1.52
Current: -3.04

-3.48
-1.52

During the past 13 years, the highest Beneish M-Score of Cheesecake Factory Inc was -1.52. The lowest was -3.48. And the median was -2.66.


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 * 0.8783+0.528 * 0.935+0.404 * 1.0029+0.892 * 1.0627+0.115 * 1.0389
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0856+4.679 * -0.0964-0.327 * 1.0242
=-3.04

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
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.
Net Income was 27.2 + 26.176 + 34.724 + 28.423 = $117 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 74.337 + 40.12 + 55.618 + 65.348 = $235 Mil.
Accounts Receivable was $15 Mil.
Revenue was 499.673 + 499.114 + 496.406 + 481.431 = $1,977 Mil.
Gross Profit was 90.629 + 88.712 + 95.385 + 86.986 = $362 Mil.
Total Current Assets was $224 Mil.
Total Assets was $1,161 Mil.
Property, Plant and Equipment(Net PPE) was $828 Mil.
Depreciation, Depletion and Amortization(DDA) was $83 Mil.
Selling, General & Admin. Expense(SGA) was $119 Mil.
Total Current Liabilities was $322 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)
=(14.159 / 2100.609) / (15.17 / 1976.624)
=0.00674043 / 0.0076747
=0.8783

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)
=(100.555 / 1976.624) / (103.494 / 2100.609)
=0.18299484 / 0.19571467
=0.935

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 - (225.396 + 892.191) / 1233.346) / (1 - (224.386 + 828.305) / 1161.376)
=0.09385768 / 0.09358296
=1.0029

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
=2100.609 / 1976.624
=1.0627

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))
=(82.835 / (82.835 + 828.305)) / (85.563 / (85.563 + 892.191))
=0.09091358 / 0.08750974
=1.0389

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)
=(137.402 / 2100.609) / (119.094 / 1976.624)
=0.06541055 / 0.06025122
=1.0856

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 + 350.226) / 1233.346) / ((0 + 322.011) / 1161.376)
=0.28396411 / 0.27726679
=1.0242

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
=(116.523 - 0 - 235.423) / 1233.346
=-0.0964

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 -3.04 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.28520.84831.03970.9081.37640.66121.2480.66711.42970.8783
GMI 1.20831.00871.03430.96422.33491.01820.95110.96031.06670.935
AQI 0.65080.88290.90181.02271.02681.01491.04171.02431.0231.0029
SGI 1.11691.14921.06270.99731.03581.05921.02921.03811.05261.0627
DEPI 1.01970.97520.88290.90150.99881.0060.97650.98710.98871.0389
SGAI 0.20230.98350.81481.05620.91760.94941.05131.06111.10510.9688
LVGI 1.11612.18551.17860.71170.68671.10761.06121.01461.17951.0242
TATA -0.0706-0.0761-0.1014-0.148-0.0807-0.0979-0.0888-0.0804-0.1191-0.0964
M-score -2.37-3.27-2.92-3.20-1.65-3.21-2.68-3.16-2.63-3.02

Cheesecake Factory Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.66711.28630.80590.94371.42971.02030.90410.92890.87830
GMI 0.35210.37120.37960.08871.06671.04831.01890.9770.9350.934
AQI 1.02431.06731.13371.06061.0231.01610.99951.00031.002910.1702
SGI 1.03811.03271.03831.04521.05261.06161.06411.06221.06271.0612
DEPI 0.98710.99750.99630.98630.98870.98221.00611.02541.03890.0918
SGAI 0.91750.96030.9740.89251.02020.9791.00631.03431.08561.0841
LVGI 1.01461.26371.33451.20891.17951.08331.06210.951.02420
TATA -0.0804-0.1166-0.1159-0.0956-0.1191-0.1069-0.1078-0.1071-0.0964-0.0403
M-score -3.45-3.12-3.55-3.45-2.61-2.90-3.03-2.99-3.040.34
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