APPLY YOUR KNOWLEDGE Serial Case 5 C12-71 (Learning Objectives 4, 5: Calculate and analyze ratios and earni company in the restaurant industry) textbook To follow are The Cheesecake Factory Incorporated's financial statements from its 2016 Note: This case is part of The Cheesecake Factory serial case contained in every chapter in this Form 10-K. The Cheesecake Factory Incorporated Consolidated Statements of Income: Condensed and adapted for educational use (In thousands) 2 Fiscal Year 2016 20152014 2013 4 Revenues 5 Costs and expenses: 6 Cost of sales 7 Labor expenses 8 Depreciation and amortization expense 9 Other expenses S 2,275,719 $ 2100,609 $1,976,624 $ 1877,910 526,628 5040 759,998 1490,306 455,685 78,558 612,650 579.644 684,818 660,951 646,102 82,835 6093 8124554 10 Total costs and expenses 2074,126 1935,363 1831893 1,716956 9225) (5894) (6,187)(4.50 1 Income from operations 12 Interest and other expense, net 13 Income before income taxes 14 Income tax expense 15 Net income 16 200,993 165,246 144,731 191,768 159,352 138,5441 42,829 5-139.494|$ 116,523 42,094 101,276 5.14 35 17 Note: Financia information presented here should not be used for investment decisions 18 Data from the U.S. Securities and Exchange Commission EDGAR Company filings, www.se.go Financial Statement Analys Consolidated Balance Sheets: Condensed and The adapted for educational use Curment assets Assets Carsh and cash equivalents January 3,2017 December 29,2015 December 30, 2014 ounts recerva 14159 18739151 2658 receivables current assets 38 net Other assets angible assets, net rent 881 Total other assets Total assets 41692 es and Stockholders Equity Other accrued Total current liabilities Noncurrent liabilities 282.855 Stockholders' equity Preferred stock 931 788 539 Ati onal paid-in capital 137 1238.012 409 889 Total liabilities and stockholders cquity 512933195 1233345 1161316 Note Financial information here should not be used for investment decisions a bm the US Securitics and Exchasge Commission EDGAR Company Slingswwweow Pecceding financial statements have been condensed and adapted for educational use and ereald not be used for investment decisions. Requirements ital figure mean? Did The Cheesecake Factory's net working capital or decrease from 2015 to 2016? Explain. talculate The Cheesecake Factory's net working capital for 2015 and 2016 What does the laprone ar dr Cheserake Factory's curren oo0, Did the cunet raio Bou wc ar sdtriorate? 2 Calculate The nprove ct he Cheesecake Factory's quick ratio for 2015 and 2016. Did the quick ratio How would you improve or deteriorate? d nventory turnover for 2016. Next, calculate days' inventory outstanding. What des this number mean? S Calculate lities E you asess The Chesecake Faxctory's verl biliyto poy is curem u assess The Cheesecake Factory's overall ability to pay its current ? Explain. Culat calculate days' sales outstanding. What does this number mean? hut does dhuns payable turnover for 2016. Next, calculate days payable outstanding. ales. NalOunts receivable turnover for 2016. Assume all net revenue is from credit ales. Next, 8. Calculate the cash conversion cycle (in days). Explain what this cash conversion cycle number means. e debt ratio increased or decreased? 9. Calculate the debt ratio for 2016 and for 2015. Has th 10. Calculate the times-interest-earned ratio for 2016. Use "interest and other ex pense, net" as interest expense. What does this ratio mean? 11. Calculate the following profitability ratios for 2016: 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