Draw Topic & Writing Ideas From This Essay On Ratio Analysis.

Cheesecake Factory is a casual restaurant business company. It operates more than 200 restaurants under several brand names. The restaurants are primarily located in the United States. The company also operates a bakery that produces desserts for its own restaurants and third-party customers.
Cheesecake Factory is one of the leaders in its industry. A ratio comparison analysis that involved Cheesecake Factory and two of its competitors showed that the company has the highest profitability, solvency, efficiency and market prospect ratios. The competitors used for comparison analysis were BJ’s Restaurant and Bravo/Brio Restaurant Group.
Cheesecake Factory profitability was measured by Net Income Margin. In 2015 Net Income Margin was 5.54 percent, which is 0.6 percent better than the nearest rival - BJ’s. This indicator has grown 0.42 percent compared to the 2014 figure. Profitability is one of the strengths of Cheesecake Factory.
Another profitability ratio used to assess the Cheesecake Factory position was Return on Assets ratio. The ratio measures the profit generating capacity of the company’s assets. The company is the leader in this measurement among the competitors analyzed. The ratio is stable over the three-year span, indicating that the efficiency of the asset utilization is not declining, which is a positive signal to the shareholder and potential investors.
Cheesecake Factory’s profitability was further evaluated by the Return on Equity ratio. Once again, the company achieved the best results among three competitors evaluated. This number was 0.2 in 2015, a 0.02 increase from 2014. The growth in this ratio measurement is another good signal to the investors, who can see that every dollar invested generates more profit year-to-year.
The efficiency of assets utilization was measured by Total Assets Turnover Ratio. Here Cheesecake Factory lost its leadership in 2015 to Bravo/Brio, but only with a slight 0.01 margin. In 2014 Cheesecake Factory was the leader in this indicator. The Total Assets Turnover Ratio is a measurement of the ability of the company’s management ability to operate the existing assets in an efficient manner.
Cheesecake Factory’s solvency was evaluated with the help of the Leverage Ratio. The ratio indicated how much of the company assets were financed by equity, compared to debt. The company is the leader in this measurement compared to the other two competitors. The high Leverage Ratio indicated that the investors believe in the company and there is an unused capacity to further finance Cheesecake Factory’s growth through debt, if necessary.
Finally, the market prospect ratios were analyzed to see how attractive Cheesecake Factory is in the eyes of the investors. The company has the highest earning per share indicator at 2.30. The closest competitor has this indicator 0.53 lower. Earnings per share have increased 16.14 percent in 2015 compared to 2014.
Price Earnings Ratio is the only Ratio used in the analysis where Cheesecake Factory has the lowest result. This ratio is an indication of how the future value of the company’s stock. Even though the Cheesecake Factory’s PE Ratio is the lowest, the company’s market stock price was the highest among the three competitors on March 16, 2016. The company also has the highest market capitalization – almost double the amount of the closest competitor.
The key ratio analysis of the Cheesecake Factory and two of its biggest rivals indicate that the company is in a strong position in every aspect of the analysis. Cheesecake Factory’s profitability, efficiency, solvency and market prospects are among the leading. Key indicators show growth from 2014 to 2015. The company is on the right track and is an attractive investment instrument.