APPLY YOUR KNOWLEDGE Serial Case C12-71 (Learning Objectives 4, 5: Calculate and analyze ratios and earnings quality for a company in the restaurant industry) , 5 Note: This case is part of The Cheesecake Factory serial case contained in every chapter in this textbook To follow are The Cheesecake Factory Incorporated's financial statements from its 2016 Form 10-K The Cheesecake Factory Incorporated Consolidated Statements of Income: Condensed and adapted for educational use (In thousands) Fiscal Year 2016 2015 2014 2013 Revenues 5 Costs and expenses: 6 Cost of sales S 2215,719 2100,609 $ 1976,624 1877910 526,628 88010 62831 490,306 455685 r expenses | 759998| 684818 -_60 603,069 78,558 Depreciat o andamortizationexpense 646,102 Other expenses 10 Total costs and expenses 1 Income from operations 660951 82,835-596 700090 85563 612,6505 200.993| 165.246 1 1,716 956 interest and other expense, net 160,954 144,731 6.18 13 Income before income taxes 15 Net income 7 Note: Financial present 5,894 159,352 42,829 139,494 S 116,523 138,544156,450 52,274 42,094 37,268 101,276 5 114 ation presented here should not be used for investment decisions 18 Data from the U.S. Securities and Exchange EDGAR Company filings, www.sec.gov Consolidated Balance Sheets: Condensed and a for educational use Assets ,2017 December 29,2015 December 30,2014 Cerrent assets Cash and counts receivable ome tax 632 Other recevables 170 39 12 658 17383 dexpenses al current assets Property a 25.396 Intangible assets, net rent er assets 4688 otal other assets Total assets Labilities and Stockholders Equity Current liabilities Accounts payable 2 Other accrued expenses Total current liabilities 47770 25 Noncurrent liabilities Stockholders' equity Preferred stock 2 Common stock 947 174137 931 10242 918 stockholders equit stoc here should not be used for om the US. Socurities and Exchange Commission EDGAR Company Eliaps www.soc.go he preceding financial statements have been condensed and alapted for edlaca onal use and hould not be used for investment decisions. Requirements calalate The Cheesecake Factory's nct wor ing capital (or 2015 and 20i6. Wht does the ctal figure mean? Did The Cheesocake Factory's net working rapial net working capi , ecrease or decrease from 2015 to 2016? Explain Calculate The Cheesecake Factory's secake Factory's current ratio for 2015 and 2016. Did the current ratio The Cheesecake Factory's quick ratio for 2015 and 2016. Did the quick ratio e or deteriorate? prove or deteriorate? l How would assess abilities? Explain. you assess The Cheesecake Factory's overall ability to pay its current does this number mean? ry turnover for 2016. Next, calculate days' inventory outstanding. Whart We accounts receivable turnover for 2016. Assume all net revenue is from credit accounts payable turnover for 2016. Next, calculate days' payable outstanding. does this number mean? Cacults calculate days' sales outstanding. What does this number mean? 8. Calculate the cash conversion cycle (in days). Explain what this cash c 9. Calculate the debt ratio for 2016 and for 2015. Ha 10. Calculate the times-interest-earned ratio for 2016. Use "interest and other ex 11. Calculate the following profitability ratios for 2016: number means. s the debt ratio increased or decreased? expense, net" as interest expense. What does this ratio mean? a. Gross margin percentage b. Operating income percentage c. Rate of return on sales d. Rate of return on assets 12. Comment on The Cheesecake Factory's profitability in 2016 based on the profitability ratios you just calculated. 13. How would you evaluate the company's earnings quality
